As India prepares to unveil its Budget 2025, industry leaders and stakeholders are closely watching for government measures that will enhance the country’s logistics and air cargo capabilities. With the government’s continued emphasis on infrastructure development, experts believe that increased investments in air cargo infrastructure—particularly in Tier 1 and Tier 2 cities—will be essential to reducing logistics costs, improving global trade competitiveness, and supporting the rapid expansion of e-commerce.
R.S. Subramanian, Senior Vice President, South Asia at DHL Express, emphasised the critical role of air cargo in India’s trade landscape by stating that, “Reducing logistics costs by simplifying regulations and making compliances easier remains a key lever for India to become even more competitive globally. The push for infrastructure development across modes is also critical for the economy as well as to support growth expectations.”
The case for increased air cargo investment
India’s logistics costs, currently accounting for 13–14 percent of GDP, are significantly higher than the global average of 8–10 percent, placing a strain on trade competitiveness and overall efficiency. While the government has made strides in improving multimodal logistics through the ‘PM Gati Shakti initiative’, industry stakeholders are advocating for a more focused approach towards air cargo expansion. A critical gap exists in air freight infrastructure beyond key metropolitan hubs, with major airports in Delhi, Mumbai, Bengaluru, and Hyderabad handling substantial cargo volumes, while Tier 1 and Tier 2 cities remain underserved. This lack of air cargo capacity limits the ability of regional exporters and manufacturers to access international markets efficiently.
Industry leaders argue that strategic funding in the upcoming budget should prioritise the development of air cargo terminals in Tier 2 cities to improve accessibility for exporters, particularly in the manufacturing and e-commerce sectors. Additionally, expanding dedicated air freight corridors would enhance connectivity between production hubs and major international gateways, ensuring faster and more cost-effective movement of goods. Further modernisation of customs procedures and tax structures is also seen as essential to streamlining air cargo operations, reducing clearance times, and improving efficiency in handling international shipments. As India seeks to strengthen its position in global trade, targeted investments in air cargo infrastructure could play a transformative role in bridging logistical gaps and fostering economic growth.
e-commerce and MSME growth
India’s e-commerce sector is poised for exponential growth, with cross-border trade playing an increasingly important role. Recognising this, the government is expected to push for e-commerce export hubs, designed to facilitate seamless international shipping for micro, small, and medium enterprises (MSMEs).
Subramanian acknowledged this trend, stating, “This year, we see more push from the government to set up e-commerce export hubs that aim to support MSMEs as well. We look forward to collaborating further with the government to simplify tax structures and customs procedures for exporters.”
e-commerce-driven exports require efficient, time-sensitive logistics networks, and air cargo plays a pivotal role in enabling businesses to reach global markets quickly. Expanding dedicated air cargo hubs with customs pre-clearance facilities could significantly enhance the ease of doing business for small exporters, making India a more attractive hub for international trade.
Sustainability and the future of air cargo
As the global logistics sector moves towards decarbonisation, sustainable air cargo operations will become an increasingly important focus area. The upcoming budget is expected to incentivise green logistics solutions, including sustainable aviation fuel (SAF), energy-efficient cargo terminals, and carbon offset mechanisms for freight operations.
Several countries have already introduced policy frameworks to encourage the adoption of SAF and carbon-neutral logistics. India has an opportunity to take the lead in this space by introducing financial incentives, regulatory support, and public-private partnerships to drive sustainability in air cargo operations.
Policy recommendations
To unlock the full potential of India’s air cargo industry, experts are calling for strategic policy measures in the upcoming Budget 2025. A key priority is increased capital allocation for air cargo infrastructure in emerging industrial regions, ensuring seamless connectivity with global trade routes. Industry leaders also advocate for customs and tax reforms to simplify export processes, reduce clearance times, and enhance India’s attractiveness as a global logistics hub. Sustainability remains a crucial focus, with recommendations for targeted incentives, including subsidies for Sustainable Aviation Fuel (SAF), electrification of ground operations, and the adoption of energy-efficient technologies. Additionally, expanding public-private partnerships (PPPs) is seen as essential to driving investment in air cargo terminals, warehousing, and multimodal logistics corridors, fostering long-term growth and competitiveness in the sector.
Air cargo as a growth catalyst
India’s 2025 budget presents a crucial opportunity to transform its air cargo sector into a globally competitive powerhouse. Investments in regional air freight capacity, e-commerce export hubs, and sustainability initiatives will not only enhance trade efficiency but also position India as a key player in the future of global logistics.
As the country seeks to become a $5 trillion economy, a robust air cargo network—spanning Tier 1 and Tier 2 cities—will be indispensable in ensuring that Indian businesses can efficiently compete in international markets. The aviation and logistics industries are now looking to the government for a decisive policy framework that aligns infrastructure expansion, regulatory reform, and sustainability initiatives into a cohesive vision for the future of air cargo in India.
