India's Aviation Sector Reaches Critical Juncture
India's aviation industry stands at a pivotal moment. The country's airports currently offer handling capacity for approximately 500 to 515 million passengers each year. However, actual passenger traffic reached 414 million during the last fiscal year. This gap between capacity and demand highlights a pressing infrastructure challenge.
Capacity Expansion Meets Growing Demand
By the financial year 2026, airport capacity should increase to nearly 550 million passengers annually. New airports at Jewar, Navi Mumbai, and Bhogapuram will contribute significantly to this expansion. Meanwhile, air traffic is expected to climb to 460 million passengers during the same period.
Looking further ahead to 2030, the sector will require adequate capacity of about 775 to 825 million passengers per annum. This projection anticipates traffic volumes reaching 630 to 650 million passengers. Timely investments and supportive policies become essential to prevent future bottlenecks and stay ahead of growing demand.
Budget Focus on Infrastructure Development
The upcoming Union Budget presents a defining opportunity for India's aviation future. Aligning with the government's Viksit Bharat vision for 2047, the budget could shape a modern, inclusive, and sustainable aviation ecosystem.
Developing world-class aviation infrastructure should receive priority attention. A renewed push for public-private partnerships could expand the current portfolio of PPP airports from 14 to an additional 25 airports within three to four years. This expansion aligns with the National Monetisation Pipeline initiative.
Modernizing existing airports and developing new metropolitan and regional hubs must complement this effort. With cargo volumes projected to nearly triple to about 10 million metric tonnes by 2030, strengthening air cargo infrastructure becomes another critical priority.
Strengthening Regional Connectivity
Sustained investment in airport upgrades will require dedicated cargo handling zones and express cargo facilities at major hubs. Upcoming airports like Navi Mumbai, Jewar, and Bhogapuram need these enhancements to ensure logistics capacity keeps pace with passenger infrastructure growth.
Aligning air freight expansion with the PM Gati Shakti initiative will enhance rail-road-air connectivity. This alignment can optimize shared assets across multimodal hubs and enable seamless door-to-door delivery of goods nationwide.
Developing inclusive and balanced regional connectivity remains vital for sector development. Strengthening the UDAN scheme with focused interventions for hilly terrains, remote areas, and the Northeast will ensure affordable, reliable air connectivity and balanced regional development.
Creating a Competitive Aviation Ecosystem
To enhance competitiveness, the Budget should prioritize rationalizing aviation turbine fuel taxation. A calibrated roadmap could progressively bring ATF under the Goods and Services Tax framework while incentivizing states to moderate Value Added Tax on ATF.
Building a self-reliant aviation ecosystem requires reinforcing GIFT City as a global hub for aircraft leasing and financing. Scaling up domestic maintenance, repair, and overhaul capabilities along with aerospace manufacturing can reduce foreign exchange outflow, deepen the domestic value chain, and create high-skilled jobs.
Embracing Sustainability and Digital Transformation
The Budget could help position India as a global aviation leader by supporting modernization of bilateral air service agreements. Developing select airports as globally competitive transit hubs backed by efficient airside infrastructure and superior passenger services will enhance India's international standing.
Sustainability should become a key focus area for the sector. Prioritizing initiatives that promote sustainable aviation fuels, develop carbon-neutral airports, and encourage adoption of energy-efficient technologies will support environmental responsibility.
Developing a digital and passenger-centric aviation ecosystem will drive the next phase of growth, efficiency, and competitiveness. Expanding DigiYatra, deploying AI-enabled air traffic management systems, and transitioning to end-to-end paperless processes can significantly enhance efficiency, safety, and passenger experience.
By aligning infrastructure expansion, fiscal reforms, sustainability initiatives, self-reliance efforts, and digitization, the Union Budget can catalyze India's aviation sector. This transformation would position aviation as a powerful enabler of inclusive economic growth, global connectivity, and the Viksit Bharat ambition.
