Advantage India
Robust
Demand
* Rising working group and widening middle-class demography is expected to boost demand.
* India has envisaged increasing the number of operational airports to 220 by 2025.
* India will require over 2200 aircraft by 2042.
Opportunities
in MRO
* Growth in aviation accentuating demand for MRO facilities.
* As of 2024, expenditure in MRO accounts for 12-15% of the total revenue; it is the second-highest expense after fuel cost.
* Union Budget 2024-25 introduces incentives to boost MRO activities in aviation, including extending export and re-import periods for repairs and implementing a 5% uniform IGST on aircraft parts.
*In June 2023, the US committed to creating a global hub for MRO for high-end drones in India.
Policy
Support
* As per the present FDI Policy, 100% FDI is permitted in scheduled Air Transport Service/Domestic Scheduled Passenger Airline (Automatic upto 49% and Government route beyond 49%). However, for NRIs 100% FDI is permitted under automatic route in Scheduled Air Transport Service/Domestic Scheduled Passenger Airline.
Increasing
Investments
* India’s aviation infrastructure received over Rs. 96,000 crore (US$ 11.2 billion) in capital expenditure between FY20 and FY25 through the Airports Authority of India and public-private partnerships.
Introduction
The civil aviation industry in India has emerged as one of the fastest-growing sectors of the economy, playing a vital role in connectivity, trade, and tourism. It encompasses scheduled air transport services (domestic and international airlines), non-scheduled services such as charter flights and air taxis, as well as dedicated air cargo services for transporting goods and mail.
India is currently the third-largest domestic aviation market in the world, supported by rising disposable incomes, urbanisation, and increasing preference for air travel. Passenger traffic (domestic + international) stood at 96.54 million during FY26 (April-July 2025), while freight traffic reached 1.2 MMT in the same period. The sector is also backed by a rapidly expanding airport network, which has grown from 74 airports in 2014 to 162 as of September 2025. Among carriers, IndiGo continues to dominate with the highest market share, supported by a strong fleet and extensive domestic and international routes.
Market Size
India is expected to overtake China and the United States to become the world’s third-largest air passenger market by 2030, according to the International Air Transport Association (IATA). The rising demand has also accelerated fleet expansion, with the number of airplanes projected to reach 1,100 by 2027.
Passenger traffic (domestic and international combined) stood at 96.54 million during FY26 (April-July 2025). Domestic passenger traffic alone is projected to rise 7-10% YoY in FY26, reaching 175-181 million, according to ICRA.
Freight movement has also grown steadily. Between FY16 and FY24, total freight traffic increased at a CAGR of 2.80%, from 2.70 MMT to 3.71 MMT. In FY26 (April-July 2025), total freight traffic reached 1.2 MMT, comprising 4,86,606 MT of domestic freight and 8,03,229 MT of international freight. Domestic freight alone registered a 6.2% increase compared to FY25 (April-July 2024).
Aircraft movement has risen in parallel with passenger and freight growth. From FY17 to FY25, aircraft movement grew at a CAGR of 3.85%,
increasing from 2.05 million to 2.87 million. In FY24, the sector recorded robust capacity and demand growth, with Available Seat Kilometers (ASK) in domestic flights reaching 162,289 million km, while Revenue Passenger Kilometers (RPK) stood at 148,251 million km.
To accommodate rising traffic, the Government of India has significantly expanded aviation infrastructure. The country’s airport network has grown from 74 airports in 2014 to 162 airports as of September 2025, more than doubling in a decade.
Key investments and developments
- Cumulative FDI inflows in India’s air transport sector (including air freight) reached Rs. 45,913 crore (US$ 5.36 billion) between April 2000-June 2025.
- In 2025, India’s aviation sector is hitting new heights as Mumbai and Delhi prepare to launch secondary airports like the Navi Mumbai International Airport and Noida International Airport respectively, to ease congestion at primary hubs, boost capacity and connectivity, and meet surging demand
- On September 4, 2025, Union Civil Aviation Minister Mr. Kinjarapu Ram Mohan Naidu said the government aims to develop the Northeast as a logistics and aviation hub connecting India with Southeast Asia, with 16 operational airports and rising international traffic from Guwahati.
- In September 2025, Air India SATS Airport Services (AISATS) became the first ground handling company in India to secure the DGCA’s Safety Clearance under CAR, aligning national operations with ICAO standards and making India the second country globally to regulate ground handling formally.
- In August 2025, Air India Express became the fourth Indian carrier alongside Air India, IndiGo and SpiceJet to join the International Air Transport Association (IATA) as a fully-fledged member, enhancing its global aviation integration with a fleet of 115 aircraft operating about 500 daily flights to 38 domestic and 17 international destinations.
- Delhi’s Indira Gandhi International Airport T3 is planning to boost its international capacity by 50% by 2025, increasing from two crore to three crore passengers annually.
- The Andhra Pradesh government plans to launch seaplane services across eight locations, backed by techno-economic feasibility studies, environmental clearances, and Detailed Project Reports (DPRs), with the first water aerodromes expected to be operational by January 2026.
- JSW Group Chairman Mr. Sajjan Jindal announced a Rs. 16,000 crore (US$ 1.9 billion) investment to develop a 1,600 MW power project in Salboni, West Bengal, along with plans to establish an industrial park and enhance infrastructure at Durgapur airport.
- Sarala Aviation, a Bengaluru-based startup, has unveiled its prototype air taxi, Shunya, designed for 20-30 km trips at speeds up to 250 kmph. Targeting launch by 2028, Shunya aims to combat traffic congestion and pollution. It accommodates six passengers, with plans to expand to other cities and introduce a free air ambulance service.
- Air Kerala, a new airline, has announced plans to launch its operations in June 2025, with its inaugural flight departing from Kannur International Airport.
- Air India Express has launched a daily direct flight service between Mangaluru International Airport and Delhi International Airport, significantly enhancing travel convenience for passengers. The inaugural flights transported 167 passengers to Mangaluru and 144 passengers from Mangaluru, both of which were celebrated with a water cannon salute. This new service is designed to benefit travelers and improve overall connectivity.
- Garuda Aerospace is poised to invest Rs. 100 crore (US$ 11.6 million) to develop a 'Drone City' in Orvakal village, Andhra Pradesh. This initiative is intended to enhance drone innovation, attract skilled talent, and position India as a leader in drone technology. The announcement was made during a strategic meeting with the Minister of Civil Aviation.
- Air India has established a codeshare partnership with Kenya Airways, enabling passengers to book combined journeys on a single ticket. This collaboration involves placing Air India’s 'AI' code on Kenya Airways' Nairobi-Mumbai flights and vice versa. The partnership aims to enhance travel options for passengers and strengthen Air India’s global presence.
- Air India Express has launched a daily direct flight service between Mangaluru International Airport and Delhi International Airport, significantly enhancing travel convenience for passengers. The inaugural flights transported 167 passengers to Mangaluru and 144 passengers from Mangaluru, both of which were celebrated with a water cannon salute. This new service is designed to benefit travellers and improve overall connectivity.
- Magellan Aerospace and Aequs have signed a Memorandum of Understanding to jointly develop an aircraft engine MRO facility in Belagavi, Karnataka, focusing on infrastructure development and cost efficiency to meet the growing demands of the civil and military aviation sectors in India.
- Adani Airports plans to invest US$ 7 billion in expanding its airport operations in India, focusing on improving its current portfolio and landside developments, as the country faces a significant aviation infrastructure gap with only 149 commercial airports for a population of 1.4 billion.
- Under the Regional Connectivity Scheme (RCS)-UDAN, two water aerodromes have been established and commenced operations, enhancing connectivity in remote areas.
- The Ministry of Civil Aviation is developing public-private partnership (PPP) modalities for the privatisation of 25 airports under the National Monetization Pipeline.
- As per the present FDI Policy, 100% FDI is permitted in scheduled Air Transport Service/Domestic Scheduled Passenger Airline (Automatic upto 49% and Government route beyond 49%). However, for NRIs 100% FDI is permitted under automatic route in Scheduled Air Transport Service/Domestic Scheduled Passenger Airline.
- Union Civil Aviation Minister Mr. Jyotiraditya Scindia inaugurates Asia's largest aviation expo, Wings India 2024, unveiling the theme "Connecting India to the World in Amrit Kaal: Setting the Stage for India Civil Aviation @2047" and launches UDAN 5.3. The event highlights India's aviation prowess, emphasizing accessibility, availability, and affordability, with significant announcements fostering industry growth and collaboration.
- AAI and other Airport Developers have targeted a capital outlay of approximately Rs. 98,000 crore (US$ 12 billion) in the airport sector in the next five years.
- The number of PPP airports is likely to increase from five in 2014 to 24 in 2024.
- India’s aviation industry is expected to witness Rs. 35,000 crore (US$ 4.99 billion) investment in the coming years. The Indian Government is planning to invest US$ 1.83 billion for the development of airport infrastructure along with aviation navigation services by 2026.
- India aims to have 220 new airports by 2025, said, Mr. Jyotiraditya Scindia, Minister of Civil Aviation. Cargo flights for perishable food items will also be increased to 30% with 133 new flights in the coming years.
- The Airports Authority of India is to spend Rs. 25,000 crore (US$ 3 billion) between 2022-27 to boost infrastructure facilities.
Government Initiatives
Some major initiatives undertaken by the Government are:
- In July 2025, the Digi Yatra app hit a milestone of 15 million downloads, facilitating over 61 million contactless passenger journeys across 24 airports since its December 2022 launch, with plans to expand to four more airports, support international travel pilots and multiple Indian languages, and reach 80 percent of domestic flyers by 2028.
- In April 2025, the government announced the next phase of airport privatisation, pairing five major airports (Amritsar, Varanasi, Bhubaneswar, Raipur and Trichy) with smaller regional ones including Kushinagar and Kangra for leasing under the public-private partnership model to boost efficiency and connectivity.
- On February 4, 2025, the Central Government granted in principle approval for aviation expansion in Bihar, sanctioning greenfield airports at Rajgir, Bhagalpur and Sonepur, redevelopment of the brownfield airport at Raxaul, and new civil enclaves at Bihta and Purnia, all poised to enhance regional air connectivity under the UDAN framework.
- As of February 2025, India has signed Open Sky Agreements with 12 countries, leading to a sharp rise in passenger traffic between them from about 2 million in 2017 to 3.2 million in 2024.
- Under the GST 2.0 reforms, the Goods and Services Tax on unmanned aircraft has been reduced to 5% from 18-28%, lowering costs for drone and flight-simulator manufacturers. The new reforms will be in action from September 22, 2025.
- On September 2, 2025, India has proposed a standardised Airline Health Score framework to ICAO to assess airlines’ financial, operational and safety performance, enabling airports to apply tiered, risk-based payment terms and mitigate financial exposure.
- The Indian government has approved 100% Foreign Direct Investment (FDI) via the automatic route for the Maintenance, Repair, and Overhaul (MRO) sector.
- The Directorate General of Civil Aviation (DGCA) has granted in-principle approval to Air India Ltd. and Interglobe Aviation Ltd (Indigo) for the import of 470 and 500 aircraft respectively. As per the induction plan of the airlines, the aircraft is proposed to be imported during the period 2023-2035.
- Union Civil Aviation Minister Mr. Jyotiraditya Scindia inaugurates Dehradun Airport's new terminal, expanding capacity to serve 3240 passengers during peak hours and 47 Lakh annually. The terminal embodies local heritage, with columns inspired by state flower "Brahmakamal", promoting sustainability and accessibility.
- UDAN scheme fosters regional connectivity with 519 operational routes, encompassing 53 tourism and 48 helicopter routes, benefiting 133.86 lakh passengers. Over 2.56 lakh flights have operated, involving 13 airlines, including startups, shaping a transformative impact on regional growth and air connectivity.
- NABH (NextGen Airports for Bharat) - Nirman is a government initiative to expand airport capacity more than five times to handle billions of trips a year, in the next 10-15 years.
- The Government has informed that India will spend US$ 11.88 billion by 2025 to boost regional connectivity by constructing airports and modernising existing ones.
- In 2023, the government has accorded 'In-Principle' approval for setting up 21 Greenfield Airports across the country. Out of these, 11 Greenfield airports have been operationalised.
- AAI Startup Policy: Delivering a framework & mechanism for the interaction of AAI with internal and external stakeholders that catalyze innovation at airports and leveraging technology for addressing challenges and enhancing the delivery of services to passengers.
- Civil enclave to be built in Jammu at a cost of Rs. 861 crore (US$ 107.9 million).
Road Ahead
India’s aviation industry is largely untapped with huge growth opportunities, considering that air transport is still expensive for the majority of the country’s population, of which nearly 40% is the upwardly mobile middle class. The government has been instrumental in developing policies to give a boost to the aviation sector. For this, the UDAN-RCS scheme has been launched by the government which aims to increase air connectivity by providing affordable, economically viable, and profitable travel on regional routes.
The industry stakeholders should engage and collaborate with policymakers to implement efficient and rational decisions that would boost India’s civil aviation industry. In 2023, the contribution of India's travel and tourism sector to India's economy was worth Rs. 21,00,000 crore (US$ 245 billion). By 2025, it is set to reach over Rs. 22,00,000 (US$ 256 billion), as per the data released by the World Travel & Tourism Council (WTTC). By 2035, the contribution is poised to be doubled reaching Rs. 42,00,000 crore (US$ 490 billion).
India’s Meetings, Incentives, Conferences and Exhibitions (MICE) industry, generated a revenue of Rs. 4,23,326 crore (US$ 49 billion) in 2024, is projected to reach Rs. 8,82,607
crore (US$ 103 billion) by 2030, driven by government initiatives, infrastructure expansion, rising corporate events, hybrid formats, and a focus on sustainability.
These developments underline the vast potential of India’s aviation sector, where expanding connectivity, supportive policies, and increasing affordability are expected to drive sustained growth. With rising passenger demand, modernised infrastructure, and collaborative policymaking, the industry is well-positioned to emerge as a global aviation hub in the coming years.
References: Media Reports, Press Releases, Press Information Bureau, Directorate General of Civil Aviation (DGCA), Airports Authority of India (AAI), Union Budget 2025-26, DPIIT
Note: Conversion rate used in July 2025, Rs. 1 = US$ 0.011
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