The air cargo industry has emerged as a crucial sector in India, contributing to economic growth and business expansion, helping the country strengthen its position as a global manufacturing hub. Driven by its rapid transit times and extensive network, air cargo has evolved from a mere auxiliary transport option into an essential solution for businesses, demanding swift and agile operations.
The industry has seen significant expansion over the years, driven by government initiatives (Krishi UDAN initiatives to bolster cargo facilities), increased demand (spurred by the need for cold storage, quick deliveries and e-commerce growth), an increasing fleet size (with airlines enhancing cargo capacity and converting passenger aircraft) and growing technology adoption (including digital cargo management and automation at airports). The freight traffic increased by 7 per cent in 2023-24 to approximately 3.37 million tonnes (mt) as compared to 3.12 mt in 2022-23. Similarly, the overall air cargo traffic during April-January, 2024-25 reflects an increase of 12.9 per cent over the corresponding period in 2023-24, owing to a significant 17.2 per cent rise in international traffic and a 6.5 per cent rise in domestic traffic, respectively.
Cargo handling infrastructure
As of 2023-24, the total air cargo handling capacity of Indian airports has reached approximately 8 mt, up from 7.4 mt in 2021-22. There are 30 international air cargo terminals operating in the country. Four major airports, including Delhi, Mumbai, Bengaluru and Chennai have continued to dominate the cargo handling scenario, contributing to over 70 per cent of all the cargo movement. In terms of cargo handled by domestic scheduled airlines, the traffic increased to 740,400 tonnes in 2023 from 684,051 tonnes in 2022, representing an 8.24 per cent rise. Further, in 2024, cargo traffic continued to grow, reaching around 786,644 tonnes, indicating sustained expansion in the domestic air cargo transportation. This upward trend, which is largely an outcome of the red sea crisis, highlights the increasing reliance on air freight services and the sector’s resilience in meeting the growing logistics demand.
Air cargo terminals
AAI Cargo Logistics and Allied Services Company Limited (AAICLAS), a wholly owned subsidiary of the Airports Authority of India (AAI), has been working towards creating cargo handling facilities through the establishment of domestic cargo terminals including in Tier-II and Tier-III cities across various states, including Maharashtra, depending on the cargo volume. AAICLAS has spent a total of Rs 2.02 billion over the past three years in constructing new air cargo terminals and expanding existing facilities, including Rs 63.3 million in Maharashtra.
During the first nine months of financial year 2024, Delhi airport, a key air cargo hub in India, witnessed robust growth in cargo operations, with volumes increasing by 14 per cent year on year to 0.83 million tonnes. This uptick in demand also boosted cargo revenues, which rose by 13 per cent to Rs 3.4 billion. Currently, cargo operations at the airport contribute towards 14 per cent of the overall non-aeronautical revenues.
Likewise, during the same timeframe, the airports under Adani Airport Holdings Limited collectively handled 0.8 million mt of cargo, an 11 per cent year-on-year increase compared to the corresponding period last year.
Recently, in March 2025, Bangalore International Airport Limited and Menzies Aviation inaugurated India’s largest greenfield domestic cargo terminal at Kempegowda International Airport, Bengaluru. The 245,000 square feet facility is the largest of its kind in the country in terms of designed capacity. Spread across seven acres, the terminal has a peak handling capacity of around 360,000 tonnes, with the potential to scale up to 400,000 tonnes. This facility is equipped with 42 truck docks, over 400 cargo bins, X-ray-integrated conveyors and 30 ULD stations, along with 40 handheld terminals and self-service kiosks for real-time data capture and enhanced agent efficiency.
Additionally, upcoming AAICLAS facilities include a mix of international and domestic airports across various locations in India. Among them, Bhubaneshwar, Lucknow, Madurai and Tiruchirappalli will serve both international and domestic flights, while Srinagar has been classified as an international airport. Several other airports, including those in Dibrugarh, Dimapur, Imphal, Dehradun, Jodhpur, Jabalpur and Rajkot-Hirasar, will function as domestic airports. These developments aim to enhance air connectivity and cargo handling capabilities, further strengthening India’s aviation infrastructure.
Airlines
India’s airlines are actively scaling up cargo operations by expanding their freight operations, driven by increasing exports, the “China Plus One” strategy and rapid e-commerce growth. Sectors that have seen a rise in exports include electronics, pharmaceuticals and perishables.
At present, IndiGo has emerged as the leading airline in terms of cargo traffic for scheduled domestic airlines in 2024, capturing 40.75 per cent of the market. This was followed by Blue Dart with a 17.43 per cent share, while Air India held 14.60 per cent. Other airlines such as Akasa Air, SpiceJet and Quickjet Cargo held smaller market shares of 6.74 per cent, 3.35 per cent and 2 per cent, respectively.
According to Boeing, India’s freighter fleet has tripled to 18 in the past six years. It further expects the fleet to procure more cargo aircraft to support the emerging demand. It plans to double its freight flows between South Asia and Europe and quadruple the flows between South Asia and East Asia over the next two decades. Similarly, Dubai-based cargo operator SolitAir Holding plans to invest $25 million in India’s air cargo market this year, underscoring the sector’s accelerating growth. The company launched its freighter services to Bengaluru in January 2025.
Digital transformation
Digitalisation has also helped in shaping the current landscape of the sector. For instance, several digital initiatives have been taken up by Mumbai International Airport Limited such as a web-based platform, “Air cargo community platform,” which connects cargo terminal operators with all air cargo stakeholders. The “Cargo mobile application” offers air cargo stakeholders complete visibility of air cargo status at Mumbai air cargo terminal.
Further, Air India has selected IBS Software’s iCargo solution to digitally transform its air cargo operations. Air India would be able to digitalise end-to-end cargo management using the integrated iCargo solution; hence, facilitating various cargo operations from sales to billing to be integrated on a single platform.
Recently, Hyderabad Airport’s cargo facility also received the “Digital Shakti Award” for implementing its air cargo communications system, as well as the Best Cargo Airport award. These underscore the airport’s commitment to innovation and quality in specialised cargo operations.
Challenges
However, no success comes without a few challenges. The air cargo industry is at crossroads and how it addresses these setbacks will determine its path to future growth.
Air transport currently accounts for just 1 per cent of the total cargo market in India. To add to this, the sector faces issues related to handling capacity. During 2023-24, airports in India had a capacity utilisation of around 42.12 per cent, indicating a notable gap between the handling capacity and freight traffic. The high-cost air freight transportation, in comparison to other modes such as roads, railways and ports, places air cargo at a lesser preferred mode from a cost point of view. Accelerated investments in modern cargo infrastructure and technology, along with targeted policy incentives, can help bridge this gap and boost the cost competitiveness of air freight.
Similarly, at present, 90 per cent of the air cargo is handled by six major Indian airports. This creates bottlenecks such as limited scalability. To address this, diversifying cargo handling capabilities across more locations would help in mitigating this risk. Additionally, Indian carriers need to expand their wide-body freighter fleets, as the sector’s reliance on belly capacity over dedicated freighters continues to plague the sector. While narrowbody aircraft generally carry little freight in other markets, according to media reports, Indian operations average around 2-3 tonnes per flight.
Finally, geopolitical unrest can cause fluctuations in demand, impacting the overall growth rate of the sector. For instance, the recent tariff wars between India and the US may possibly result in affecting trade between the two countries, ultimately impacting freight movements to and from India.
The road ahead
According to estimates by Indian Infrastructure, air cargo in India is projected to grow at a compound annual growth rate (CAGR) of 9 per cent during FY2025. However, over time, CAGR is expected to moderate to 6-7 per cent (as the impact of the pandemic moderates out), reaching roughly 4.5 mt by 2029, up from the current 3.37 mt. This would be supported by multiple factors such as the overall macroeconomic growth with a rising GDP, increased focus on dedicated freighters, demand for e-commerce and upcoming cargo terminals. Moreover, as the country gears up to achieve the target of $2 trillion exports by 2030, the air cargo sector can emerge as a key contributor to this target. Further, by closing structural gaps and adopting forward-looking strategies, the sector can reinforce its position as a global logistics cornerstone, ensuring sustained growth and competitiveness in the long term.
Shashwat Singh
