Budget 2026: Focus on aircraft manufacturing; aviation safety budget flat  

The Union Budget 2026-27 gave a push to domestic aircraft manufacturing, but allocation for aviation safety remained flat with a 12% drop in the budget for the civil aviation ministry for FY27.

Finance Minister Nirmala Sitharaman announced exemption of basic customs duty on components and parts required for the manufacture of civilian, training, and other aircraft. The government has been focusing on the domestic aircraft manufacturing industry in the country.

“It is proposed to exempt basic customs duty on raw materials imported for the manufacture of parts of aircraft to be used in maintenance, repair, or overhaul requirements by Units in the Defence sector,” she said.

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Kinjal Shah, Senior Vice President & Co-Group Head, Corporate Ratings, ICRA Limited, said the enhanced focus on developing infrastructure in Tier II and III cities, including temple towns and proposals for developing trekking trails and 15 archaeological sites would further support tourism and thus the aviation sector.

“Additionally, the Budget proposes a basic customs duty (BCD) exemption on components and parts used in the manufacture of civilian, training, and other aircraft. This will help lower the aircraft purchase cost for the airlines,” he said.

The budget of the civil aviation ministry, allocated for the Directorate General of Civil Aviation and Bureau of Civil Aviation Security, almost flat.

The Union Finance Minister focused on Tier II and Tier III cities in her Budget. However, the regional connectivity scheme budget was increased to Rs 10 crore for FY27.

Vinay Dube, Founder and CEO, Akasa Air said the Union Budget for FY26-27 presents a forward-looking framework to comprehensively accelerate tourism and mobility across the country.

 “With travel demand increasingly driven by Tier 2 and Tier 3 cities along with the metros, the focus on strengthening last-mile connectivity and infrastructure is encouraging for the travel industry. We appreciate the government’s continued focus on creating a resilient, future-ready travel ecosystem and thank them for their sustained commitment to building a Viksit Bharat,” he added.