The Indian aviation sector is undergoing rapid transformation, driven by strong domestic demand, expanding infrastructure and emerging opportunities. The country has emerged as one of the world’s fastest growing aviation markets, supported by rising passenger traffic, expanding airport infrastructure and increasing connectivity to smaller cities and towns. The government’s focus on modernising airports, strengthening regional connectivity and creating a more efficient aviation ecosystem is opening up new avenues for airlines, airports, manufacturers and service providers. The sector is also witnessing increased interest from global investors and aviation companies, creating opportunities across aircraft manufacturing, maintenance, repair and overhaul (MRO), cargo and related services. With ambitious infrastructure plans, policy support and a large potential passenger base, India is positioning itself as a key player in global aviation. At various industry events, Kinjarapu Ram Mohan Naidu, Union Minister of Civil Aviation, highlighted the sector’s progress, evolving ecosystem and promising future. Edited excerpts…
India’s aviation sector is transforming at a pace that is attracting global attention. The number of airports increased from 65 in 2001 to 75 by 2014. In the following 12 years, from 2014 to 2026, more than 90 airports have been added. About 55 unutilised and unserved airstrips have been revived and converted into operational airports. The traffic was earlier largely concentrated in only six of the major airports, leaving Tier II and Tier III cities mostly uncovered or underserved. However, the launch of the National Civil Aviation Policy in 2016 transformed the picture.
In 2025-26, passenger traffic reached 191 million across domestic and international routes. The country’s commercial aircraft fleet is expected to reach around 1,100 aircraft by 2027 and could further go up to 2,250 aircraft by 2035. The scale of aircraft orders placed by Indian carriers reflects the confidence in this growth. IndiGo has placed orders for up to 1,330 aircraft with Airbus, while Air India has orders for around 570 aircraft.
The expansion goes beyond simply adding aircraft or passengers, pointing to the emergence of a larger aviation ecosystem covering airports, regional connectivity, aircraft leasing, financing, MRO, logistics and air cargo.
Moreover, the focus is no longer only about connecting major cities. Through the Ude Desh ka Aam Naagrik (UDAN) scheme, aviation is increasingly being used to connect smaller towns and remote regions, create economic opportunities and make air travel accessible to a wider section of society.
The transformation is visible in the broader growth of the market. India has repeatedly recorded more than 0.5 million domestic passengers in a single day.
The inauguration of major greenfield airports such as the Navi Mumbai International Airport in Mahrashtra and Noida International Airport in Uttar Pradesh has further expanded the country’s aviation infrastructure.
From connectivity to inclusion
UDAN has made notable progress over the past decade. Since its launch in 2016, the scheme has supported 669 routes, 95 airports, heliports and water aerodromes, around 0.35 million flights and 16.6 million passengers. More importantly, it has changed the perception of aviation, making it more inclusive.
Air travel, once viewed largely as a service for higher-income passengers, is becoming increasingly accessible to the middle class, neo-middle class and lower-income groups.
The expansion of passenger services is also a part of this shift towards inclusion. Initiatives such as the UDAN Yatri Café, now present at 24 airports, illustrate how the growth of aviation is changing the passenger experience for various categories of travellers.
The wider economic impact
The impact of UDAN extends well beyond reducing travel time. The arrival of an airport can alter the economic geography of an entire region. For example, travelling between Keshod and Ahmedabad, which took eight to nine hours by road or rail, can now be completed in less than an hour with the coming up of Keshod airport.
Darbhanga provides another illustration. Previously, reaching the nearest airport would involve journeys spanning more than 12 hours, particularly difficult in areas with poor roads and challenging weather conditions. Darbhanga airport has since provided direct connectivity to major cities and opened the region to wider markets.
The benefits further extend to students, businesses, tourism and, in particular, agriculture. Perishable products can reach distant markets within hours rather than days. For instance, litchis from Bihar have been exported through Darbhanga airport to the UAE and Italy, while apricots from Jammu & Kashmir have reached markets such as the UAE and Singapore. Mangoes and other agricultural products are similarly benefiting from improved connectivity.
This creates a link between aviation and rural economic development. An airport can hence not only enable a Tier II or III city to facilitate passenger travel but also send local products to national and international markets. Tourism, real estate, hospitality and employment can further develop around this connectivity, creating both immediate and longer-term economic effects. The broader objective, therefore, is not merely to measure how many people fly, but to assess what aviation could enable once a region becomes connected.
Viksit UDAN
The sector is taking one step forward with Viksit UDAN. The government has approved an overall outlay of Rs 288.4 million, with the programme designed to extend regional connectivity for another decade. Under the scheme, about 100 aerodromes and 200 modern helipads are planned over the next 10 years, with particular attention to currently unconnected and remote areas, hilly terrain, aspirational districts and the Northeast. Around Rs 121.59 million has been allocated for the development of 100 aerodromes, while Rs 36.61 million has been earmarked for 200 helipads. The new framework also recognises that building infrastructure alone is not sufficient. Around Rs 25.77 million has been allocated for operations and maintenance support for airports that face difficulties in becoming financially viable.
A major change is also being made to the viability gap funding structure. Earlier, airlines received 100 per cent support for three years. Under the new approach, support will extend to five years but would gradually taper over the period: 100 per cent in each of the first two years, 75 per cent in the third, 50 per cent in the fourth and 25 per cent in the fifth. This is aimed at giving routes an initial push rather than creating a long-term dependence on government support. It is expected that as passengers become accustomed to air travel, demand will develop and routes will eventually become commercially sustainable.
Building the aviation ecosystem
The expansion of regional connectivity will create demand far beyond airports and passenger services. More routes and aircraft will require financing, leasing, maintenance and other supporting infrastructure.
Aircraft leasing is particularly significant because Indian carriers have substantial future aircraft requirements. Indian airlines currently have outstanding deliveries of around 1,640 aircraft, while approximately 85 per cent of the country’s scheduled fleet is already leased. Lease rentals could represent a potential opportunity of around $50 billion for the leasing ecosystem over the next decade.
In this context, GIFT City is emerging as an important component of India’s aviation strategy. The financial infrastructure being developed is aimed at bringing a greater share of aircraft leasing and financing activity onshore, rather than having it take place entirely through overseas centres.
The ecosystem has begun to develop. As of December 2025, GIFT IFSC had 38 registered aircraft leasing entities and 370 leased assets valued at approximately $5.8 billion, alongside around $615 million in aviation financing executed through IFSC banking units.
Recent regulatory changes are also intended to strengthen this ecosystem. The Protection of Interests in Aircraft Objects Act, 2025 aligned India’s legal framework with the Cape Town Convention and strengthened creditor rights and repossession mechanisms. The objective is to reduce uncertainty for lessors and make aircraft financing in India more attractive.
Union Budget 2026 also extended the tax framework for IFSC-based leasing structures, providing greater policy predictability for investors. Together, these measures could help India capture more of the financial value generated by its rapidly expanding fleet.
Cargo, MRO and the next generation of aviation
The growth of regional airports is also expected to strengthen air cargo. For agricultural producers in particular, better cargo connectivity can facilitate the movement of high-value and perishable products rapidly to distant markets. The emerging idea of a “one product, one airport” ecosystem reflects this potential, linking airports more closely with local production and regional economic strengths.
At the same time, rising aircraft numbers will increase demand for MRO services. As the fleet expands, India will require greater capacity for aircraft MRO, along with supporting manufacturing and aviation services.
The aviation ecosystem is also becoming more diverse. Beyond conventional narrow-body and wide-body aircraft, the sector is expected to see greater demand for regional aircraft, helicopters, seaplanes, freighters and eventually air taxis. The planned expansion of seaplane operations and regional aviation could create new opportunities for aircraft leasing and specialised aviation services.
A transformative decade ahead
The next decade is not only about creating world-class airports or increasing the number of passengers and aircraft, it is about creating the whole ecosystem, comprising MRO, manufacturing, helicopter operations, seaplane operations and new forms of aviation that will come in the years ahead.
Civil aviation has a crucial role to play as an enabler of mobility, trade and connectivity and, more importantly, of India’s aspiration to be a hub nation in every sense of the word, underscoring the importance of the next phase of UDAN.
In the coming decades, Viksit Bharat 2047 will be supported by an aviation ecosystem that is more connected, more inclusive, more resilient, and truly capable of supporting India’s transformation.
“The expansion of regional connectivity will create demand far beyond airports and passenger services.”
