New Delhi, Oct 6 (IANS): Airline company Vistara on Tuesday pointed to the need for a supportive supply and regulatory environment in India to realise the aviation sector’s potential to generate economic value worth $250 billion per annum by 2025.

Vistara which is a joint venture (JV) between India's TATA Group and Singapore Airlines revealed the figures in a report titled 'Maximising the contribution of aviation to the Indian economy'.

The report, prepared for the airline by the Centre for Asia Pacific Aviation (CAPA), estimated a three-fold increase in domestic air traffic and a potential for the sector to contribute to over five percent in the country's gross domestic product (GDP) by 2025.

By 2050, the report said that the sector could directly employ more than 2.3 million people.

"This report will provide valuable insights for greater partnership between government and businesses," Prasad Menon, chairman, TATA SIA Airlines was quoted in a statement.

Besides, the expected potential of the sector, the report highlighted the role Indian aviation can play in delivering many of the government's priority initiatives including tourism development and 'Make in India'.

"India needs to aspire to create a world class and competitive airline industry that can hold its own," said Mukund Rajan, director on board, TATA SIA Airlines.

The report cited the need to have industry supportive regulatory environment in India -- which has a low penetration of aviation.

It has been estimated that only 1-2 percent of the total population in India travel by air and the annual per capita seats are less than a quarter that of China, Indonesia or Thailand.

The report recommended several measures to give boost to the industry including rationalisation of taxes on jet fuel, lowering of airport charges and making in-country MROs (maintenance, repair, and overhaul) more competitive.

In addition to lowering of business cost, the report called for single window process for licensing, expediting cargo processing and abolishment of overseas flying eligibility norms for airlines, commonly known as the "5/20" rules.

Currently, the norms prescribe that only those carriers that have been in operation for five years and have a fleet of 20 aircraft can fly abroad.

The airline along with AirAsia India, another Tata Group JV company has asked the government to revoke the '5/20' rule.

"It beggars belief that foreign airlines with no comparable restrictions can fly into India, but Indian airlines that are interested to do so are prevented from flying overseas," Rajan said.

"The result is that the dominant market share of carriage of Indian customers, close to 70 percent, has shifted to foreign airlines."

However, the industry is divided on the issue. The Federation of Indian Airlines (FIA) has also written a letter to the PMO (Prime Minister's Office) against doing away with the "5/20" rule.

In August Minister of State for Civil Aviation and Tourism Mahesh Sharma had said that a mechanism has been found to either modify or altogether replace the overseas flying eligibility rules for airlines.

That time he had said that the "5/20" rules had come up for discussion during a meeting held in August with Prime Minister Narendra Modi along with Civil Aviation Minister Ashok Gajapathi Raju Pusapati.