India resumes airport privatization to boost revenue

India has reactivated its airport privatization initiative as part of a broader strategy to generate revenue through asset monetization. The Ministry of Civil Aviation has begun inter-ministerial consultations on privatizing 13 airports, aiming to complete the process by the end of FY26. This step aligns with the government’s commitment to increasing revenue from asset monetization, as outlined by Finance Minister Nirmala Sitharaman in the Union Budget on February 1.

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India has revived its airport privatization process as part of its broader asset monetization strategy. The Ministry of Civil Aviation has initiated inter-ministerial consultations on privatizing 13 airports, with the goal of completing the process by the end of FY26. This move aligns with the government’s objective of enhancing revenue through asset monetization, as announced in the Union Budget on February 1 by Finance Minister Nirmala Sitharaman. She stated that Rs 10 lakh crore worth of assets would be monetized over the next five years as part of the second installment of the National Monetization Plan.

The Centre had previously earmarked 25 airports for monetization between 2022 and 2025 under the National Monetization Pipeline. In 2021, the Board of the Airports Authority of India (AAI) approved 13 airports for the second phase of privatization. Subsequently, a cabinet note was prepared by the Ministry of Civil Aviation. However, the list was later reduced to 11 airports after objections from the Madhya Pradesh government regarding the privatization of Raipur and Indore airports.

A significant change in this round of privatization is the clubbing of smaller airports with larger, more profitable ones. The government’s intent is to balance the financial viability of privatization while ensuring that smaller airports also benefit from private investment. For instance, Varanasi has been clubbed with Kushinagar and Gaya; Amritsar with Kangra; Bhubaneswar with Tirupati; Raipur with Aurangabad; Indore with Jabalpur; and Tiruchirappalli with Hubli. This approach addresses previous criticism that privatization focused only on profit-making airports, leaving AAI burdened with financially unviable ones and leading to monopoly concerns in the sector.

The finance ministry has instructed all relevant ministries to prepare an infrastructure project pipeline for the next three years, with airport monetization playing a crucial role in this strategy. This initiative is expected to reinvigorate investment in the public-private partnership (PPP) model and accelerate economic growth in the aviation sector.

With the government reshaping its airport privatization policies, the upcoming phase is expected to foster a more balanced and sustainable development of India’s aviation infrastructure. By attracting private investment, the initiative aims to improve airport facilities, enhance operational efficiency, and contribute to the broader economic growth of the country.