India’s air cargo sector is entering a critical phase, where rising demand is colliding with cost pressures and infrastructure gaps, even as the country positions itself as a global manufacturing and logistics hub.
The segment, which plays a key role in time-sensitive trade such as pharmaceuticals, perishables and high-value exports, is facing a squeeze driven by geopolitical disruptions, longer flight routes and capacity constraints.
This comes at a time when India’s logistics sector is expanding rapidly, with over 4.6 billion tonnes of freight movement annually and logistics costs falling to under 8 per cent of GDP, according to industry estimates.
“Cargo prices in the industry have kind of doubled in the last one to two months,” said the Air India Cargo Head Rameh Mamdiwala, highlighting the sharp escalation in freight costs.
Speaking with BW Businessworld on the sidelines of the Logistics Shakti Summit 2026, Mamdiwala said airlines operating long-haul routes are increasingly being forced to take longer paths, leading to higher fuel consumption and reduced cargo capacity.
“Airlines are being forced to take longer routes due to geopolitical issues, which means carrying more fuel, increasing costs and reducing cargo capacity,” Mamdiwala said. “When the cost of operation goes up, it has to be passed on to customers,” he said, adding that the impact is cascading across trade and ultimately reaching end consumers.
India’s air cargo ambitions are also running up against a capacity challenge, even as demand is expected to rise sharply over the next decade. The sector currently handles around 3.5 - 3.7 million tonnes of cargo annually, with projections indicating a scale-up to 10 million tonnes by 2031 - 32 and 25 million tonnes by 2047.
A key constraint remains the concentration of cargo operations, with nearly 70 - 80 per cent of volumes handled by just four to five major airports, limiting the effective utilisation of capacity across the wider network.
“Airlines need to bring in more freighters. Airports need to invest in infrastructure, especially in tier 2 and 3 cities,” Mamdiwala said. He added that while connectivity across cities has improved, the availability of dedicated cargo capacity remains limited, particularly outside major hubs.
27/04/2026 Mohd Naushad/Business World
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