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India will remain one of the very few large air freight markets still growing with consistency. Shipments will rise, routes will realign, and air cargo will continue to play a strategically vital role in India’s export economy. But growth will offer little comfort. Expansion will slow, margins will be thin, and the deep-rooted stresses exposed in 2025—many of them policy-induced—will remain unresolved.
The defining question for 2026 is no longer whether India’s air cargo sector will grow—it will—but whether it can do so without locking itself into a permanent state of financial stress.
After two years of unusually strong expansion, the market is normalizing. ICRA expects India’s air cargo volumes to grow by 4–6% in FY2026, down from around 10% in FY2025. Domestic cargo is forecast to grow faster at 5–7%, while international cargo growth is expected to moderate to 2–4%, weighed down by a high base and persistent global trade friction.
This deceleration is not a sign of fragility. It reflects the gradual unwinding of tariff-driven, front-loading, post-pandemic supply chain reconfiguration, and aggressive capacity redeployments. What it signals instead is a more exacting operating environment, where growth will be shaped less by external tailwinds and more by execution, cost discipline and policy coherence.
Despite a tougher base, three forces will continue to anchor the Indian market. High-value, time-critical exports remain structurally aligned with air freight. Pharmaceuticals -- vaccines, biologics, and temperature-sensitive formulations --depend on speed and reliability. Electronics, particularly smartphones, have today become core to the Indian export profile, with tight production cycles and global launch timelines that favor air over sea transport.
E-commerce and express cargo are no longer cyclical add-ons. Domestic express, cross-border parcels and Asia-origin cargo feeding global consumption markets provide a stable demand floor. This is why domestic air cargo is expected to continue outperforming international volumes through 2026.
Trade diversification is cushioning shocks. As U.S. tariffs and geopolitical uncertainty reshape flows, Indian exporters are redirecting shipments toward Southeast Asia, the Middle East, Africa, Australia and parts of Latin America. As one freight forwarder put it during the tariff shock of late 2025, “cargo has not vanished—it has simply been rerouted.”
The global backdrop, however, will be far less forgiving. The International Air Transport Association expects global merchandise trade growth to remain below 1% in 2026, as protectionism hardens into policy and the one-off effects of tariff front-loading fade. IATA Director General Willie Walsh has repeatedly noted that air cargo is “adapting to trade shocks rather than buckling under them,” but adaptation does not automatically translate into profitability.
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The disruption witnessed in late 2025 on the India-U.S. corridor showed what could happen. Higher duties rendered air freight uneconomical for many labour-intensive exports, forcing abrupt shifts in routing and mode choice. Rajen Bhatia, Managing Director of Tulsidas Khimji Pvt Ltd, observed that the impact was no longer anecdotal. “Weekly air cargo volumes from India to the U.S. dropped by around 8–12% week-on-week, and overall volumes ran well below recent averages,” he said.
Others saw the fallout spread across categories. “Handicrafts, gems and jewellery, textiles, engineering tools—even seafood—were hit,” noted Afzal Malbarwala of Galaxy Freight. “Exporters cut order sizes and began actively scouting alternative markets.” Dinesh Krishnan, another freight forwarder, was blunter: “Once duties crossed 50%, air freight simply stopped making sense for most discretionary cargo.”
This places a heavier burden on India’s own competitiveness. Without global tailwinds, inefficiencies at home matter far more.
On paper, ambition is not lacking. More than $12 billion has been earmarked for airport expansion through greenfield projects and brownfield upgrades. In practice, cargo remains an afterthought to passengers.
Capacity creation is still passenger-led, with cargo accommodated rather than planned. During airport rebuilds, continuity of cargo supply is seldom protected. Dedicated freighter infrastructure continues to be treated as optional. The result is congestion at existing hubs, uncertainty around transitions to new airports, and rising handling costs that directly erode export competitiveness.
These weaknesses are compounded by aircraft availability constraints and limited MRO capacity—problems rooted in years of under-investment and regulatory inertia. They will not be solved in a single budget cycle and will remain visible well beyond 2026 unless explicitly addressed.
Costs are moving in the wrong direction. While fuel prices may soften marginally, non-fuel costs—labor, maintenance, leasing and airport charges—continue to climb. Passenger airlines can absorb these pressures because cargo is cross-subsidized by ticket revenue. Dedicated freighter operators cannot.
The financial divergence is already stark. Express operators with time-definite, contract-backed models—most notably Blue Dart Aviation—remain profitable. Independent freighter airlines are squeezed from all sides by suppressed yields, royalty-driven airport charges and surplus belly capacity.
India is moving more freight by air than ever before. According to Airports Authority of India data, cargo throughput exceeded 1.2 million tonnes between April and July 2025 alone, with steady growth continuing into FY2026. Yet most of the companies carrying this cargo struggle to earn sustainable returns.
 One quiet achievement of 2025 was the system’s ability to absorb shocks. Tariff disruptions, route volatility and even domestic airline disruptions did not trigger a national cargo breakdown. Freight was rerouted, integrators leaned on proprietary networks, and airports prioritized clearance. Veteran industry observer C K Govil described this as evidence that “the ecosystem has matured enough to bend without breaking.” That resilience will carry into 2026.
But resilience without profitability is not a strategy.
Unless India addresses royalty-heavy airport charging models, adopts cargo-first planning during infrastructure upgrades, and levels the playing field between belly cargo and freighters, the paradox will persist: volumes will rise, relevance will grow—and financial stress will deepen.
India’s air cargo market will grow in 2026.
The harder test is whether it can finally grow up.
Tirthankar Ghosh |
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