The civil aviation industry in India has emerged as one of the fastest-growing sectors in recent years, making the country the third-largest domestic aviation market in the world. According to the International Air Transport Association (IATA), India is expected to overtake China and the United States to become the world’s third-largest air passenger market by 2030.
In FY26 (April-July 2025), passenger traffic (domestic and international combined) stood at 96.54 million. Freight movement also continued to expand, with total freight traffic at 1.2 MMT during the same period, including 4,86,606 MT of domestic freight and 8,03,229 MT of international freight. Domestic freight traffic alone registered a 6.2% increase compared to FY25 (April-July 2024).
Aircraft movement has consistently risen over the years, recording a CAGR of 3.85% from 2.05 million in FY17 to 2.87 million in FY25. In FY26 (April-July 2025), total aircraft movement, including general aviation, reached 1.063 million.
Industry outlook remains strong. Indian airport operators are projected to see an 18-20% YoY growth in FY26, driven by rising passenger traffic, tariff revisions, and growth in non-aeronautical revenues, according to ICRA. Domestic passenger traffic alone is expected to increase 7-10% YoY, reaching 175-181 million in FY26.
The sector’s supporting ecosystem is also gaining momentum. Domestic Maintenance, Repair and Overhaul (MRO) service providers are expected to see revenues triple by FY28, driven by a doubling of India’s aircraft fleet, government support, and continued MRO capex at airports, according to Crisil.
To strengthen infrastructure, the Ministry of Civil Aviation is pursuing privatisation of 25 airports under the National Monetisation Pipeline through public-private partnership (PPP) models. Between FY20 and FY25, India’s aviation infrastructure attracted over Rs. 96,000 crore (US$ 11.2 billion) in capital expenditure, channelled through the Airports Authority of India and PPPs.
Foreign investment continues to underpin the sector’s growth. Cumulative FDI inflows in India’s air transport sector, including air freight, reached Rs. 45,913 crore (US$ 5.36 billion) between April 2000 and June 2025.
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.
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.
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.
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.
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 full-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.
Union minister of Civil Aviation and Steel, Mr. Jyotiraditya M. Scindia spearheads Airbus-Dynamatic Technologies collaboration for A220 door manufacturing in India, amplifying 'Make in India' and AatmaNirbhar Bharat missions, underlining employment growth and technological advancement in aerospace sector.
Union minister of Civil Aviation and Steel, Mr. Jyotiraditya M. 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.
On February 1, 2025, the Union Budget 2025-26 announced a boost to aviation with a modified UDAN scheme aiming to connect 120 new destinations and carry four crore passengers over the next 10 years, while enhancing regional air-cargo infrastructure and streamlining customs processes.
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 travelers and improve overall connectivity.
On 16 August 2024, the Cabinet Committee on Economic Affairs, chaired by Prime Minister Mr. Narendra Modi, approved the Airports Authority of India's proposal to develop a New Civil Enclave at Bagdogra Airport in Siliguri, West Bengal, at an estimated cost of Rs. 1,549 crore (US$ 185.69 million), featuring a 70,390 sqm terminal designed for 3,000 Peak Hour Passengers and an annual capacity of 10 million passengers, along with a green building initiative to enhance operational efficiency and passenger experience.
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.
The Airports Authority of India is to spend Rs. 25,000 crore (US$ 3 billion) between 2022-27 to boost infrastructure facilities.
Capacity (Available Seat Kilometre) available in domestic and international flights combined increased to 2,94,702 million kms in FY24 as compared to 2,60,488 million kms in FY23.
Correspondingly, passenger load factor (PLF) stood at 86% in FY24 as compared to 82% in FY23.
During the year from FY14 to FY24, the capacity (Available Seat Kilometre) in the domestic market grew at a rate of 6.9% CAGR.
In June 2023, Union Civil Aviation Minister Mr. Jyotiraditya Scindia said that 200-220 more airports, heliports, and water aerodromes will be built in the country over the next five years.
On July 14, 2023, the fourth runway and dual ECT (also called elevated taxiways) became operational at the Delhi airport. Indira Gandhi International Airport (IGIA) is the first airport in the country to have four runways and Eastern Cross Taxiways (ECT).
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.
India’s civil aviation sector is set for robust growth, driven by rising passenger traffic, expanding freight operations, infrastructure modernisation, and technological innovation. With continued investment, policy support, and advancements in regional connectivity, the industry is poised to strengthen India’s position as a global aviation hub, fostering enhanced mobility, trade, and economic development in the years ahead.
