Economic Survey 2025-26: India's civil aviation sector on sustained growth trajectory

New Delhi: India's civil aviation sector is on a sustained growth trajectory, helped by a conducive policy environment, rising demand and steady infrastructure expansion, the Economic Survey said on Thursday.

As the country aims to be a global hub for aviation activities, the Survey said Indian airports can aspire to become global aviation hubs by promoting layovers and enhancing the transit experience for international passengers.

"While the sector remains sensitive to global economic cycles and the need for continuous capacity upgradation, the current passenger volumes represent only a fraction of India's potential," it said.

India is the world's third-largest domestic aviation market and the number of airports increased to 164 last year from 74 in 2014.

In FY25, Indian airports handled 412 million passengers, and the same is projected to increase to 665 million by FY31.

However, the Survey said the country currently operates approximately 0.11 airports per million people, significantly lower than the US (47.35) and China (0.39), signalling substantial headroom for further growth.

"Expansion in India's airport and air navigation infrastructure and a growing ancillary ecosystem, including Maintenance, Repair, and Overhaul (MRO) and leasing, are strengthening the sector.

"These developments, along with technology integration, positions civil aviation as a key driver of nationwide economic connectivity and integration," the Survey said.

On Wednesday, Prime Minister Narendra Modi highlighted the growth potential and policy stability as he wooed investors, saying that there are immense opportunities in aircraft manufacturing, pilot training, advanced air mobility and aircraft leasing areas in the country.

Modi, in a special message at an aviation summit, had also said the government is working on all necessary regulatory reforms to make cargo movement faster and more efficient.

Meanwhile, the Survey said that aviation services have continued to play a key role in sustaining passenger mobility and air cargo flows.

In FY25, overall air passenger traffic increased by 9.4 per cent to 411.8 million passengers.

"However, a softening of momentum was observed during April-November 2025, when overall passenger traffic increased by 3.5 per cent (YoY), reflecting flight disruptions and short-term demand adjustments in the domestic passenger segment," it noted.

According to the Survey, air cargo volume grew from 2.53 million metric tonnes (MMT) in FY15 to 3.72 MMT in FY25, and 2.95 MMT handled in FY26 (until December), driven by several key policy initiatives and reforms.