As one of the world’s fastest-growing air cargo hubs, India faces mounting pressure to align its policies, infrastructure, and digital systems with global standards—or risk missing a major opportunity to lead in global logistics.

That was the central message at the International Air Transport Association’s (IATA) 81st Annual General Meeting, held in New Delhi, where industry leaders emphasized the urgent need for coordinated reforms across taxation, infrastructure development, and regulatory alignment.

India now ranks as the third-largest aviation market globally and the sixth-largest air cargo hub. The sector supports 7.7 million jobs and contributes US$53.6 billion to GDP—roughly 1.5 percent of India’s total economic output. Yet these headline figures mask persistent structural challenges.

Fiscal frictions and investment deterrents

One of the most pressing issues raised was fiscal unpredictability, particularly around tax enforcement. IATA pointed to recent retrospective tax demands on international airlines and lessors, including GST-related disputes and tax notices issued in the 2023–24 and 2024–25 financial years.

“Air cargo operations are highly sensitive to fiscal uncertainty,” said Amitabh Khosla, IATA’s Country Director for India, Nepal, and Bhutan. “Unpredictable tax measures undermine capital planning and impair route viability.”

IATA is calling for India to align its tax framework with international conventions, ensuring that foreign operators have the clarity they need to invest confidently in the market.

Freight infrastructure falling behind growth

While India is investing heavily in new terminals and airports—including high-profile projects in Noida and Navi Mumbai—air cargo stakeholders say the infrastructure boom risks overlooking the unique needs of freight.

Cargo-specific facilities such as cold-chain storage, ramp-side handling areas, and modern customs systems are still not being prioritized in many development plans. IATA has urged policymakers to embed these requirements into the blueprint of all major airport projects from the outset.

There is some positive movement. The Airports Economic Regulatory Authority (AERA) recently proposed performance-linked tariff structures, a step welcomed by IATA. However, proposed regulatory changes to merge tariff setting for Mumbai and Navi Mumbai, along with extending tariff control periods from five to ten years, have raised concerns.

“Such consolidation may limit tariff responsiveness and distort price signals for infrastructure investment,” warned Khosla.

Congested skies, limited access

Infrastructure issues are not limited to the ground. Slot allocation at major hubs like Delhi and Mumbai continues to constrain freighter access. IATA acknowledged recent improvements in slot governance at Mumbai International Airport, where terminal closures were handled in compliance with the Worldwide Airport Slots Guidelines (WASG).

But broader airspace congestion remains a growing problem. In April 2025, traffic over the Arabian Sea corridor surged by 25 percent, with some oceanic sectors reporting 60 percent increases due to diversions. This has underscored the need for regional coordination in airspace management.

“A seamless South Asian FIR architecture is essential to support long-haul cargo and regional belly operations,” Khosla noted.

Sustainability needs policy backbone

Sustainable Aviation Fuel (SAF) also featured prominently in IATA’s policy agenda. India, already the world’s third-largest ethanol producer, is well-positioned to become a global leader in SAF production. Both Air India and Indian Oil have joined the CORSIA-compliant CADO SAF Registry.

Still, a lack of regulatory clarity means domestic production is unlikely to begin before 2026. IATA is pushing for swift action: adoption of book-and-claim systems, certification through the National Accreditation Board for Certification Bodies (NABCB), and alignment with international standards like the ISCC framework.

“Without policy coherence, India’s freight sector risks falling behind the net-zero trajectory,” said Khosla.

Digitisation must move beyond pilots

India’s broader digital logistics agenda has gained momentum through projects such as DigiYatra and the Unified Logistics Interface Platform (ULIP). Yet execution has been patchy, particularly in air cargo.

IATA is advocating for full-scale adoption of the e-Air Waybill and faster deployment of the ONE Record framework—a data-sharing standard designed to bring end-to-end visibility to shipments.

“Digital air cargo standards must be embedded into India’s logistics master plans,” said a senior official from the Ministry of Civil Aviation. “Fragmentation in customs digitisation is no longer tenable.”

The missing link

Beyond domestic reforms, international legal alignment remains critical. IATA is urging India to ratify the Montreal Protocol 2014 to enhance global aviation safety and passenger conduct enforcement.

For cargo operations, alignment with international standards like ICAO Annex 9 and the World Customs Organization’s trade facilitation norms is key. Harmonization, IATA argues, would simplify cross-border compliance and strengthen India’s position as a logistics bridge between Europe, the Middle East, and Southeast Asia.