How Union Budget 2025 can propel India’s aviation sector forward

As we edge closer to the Union Budget 2025, the aviation sector, a key driver of economic growth and global connectivity, anticipates critical policy interventions to address challenges and embrace opportunities. With India’s projected GDP growth of 6.4 per cent for the upcoming fiscal year, the sector seeks reforms that align with national economic goals and the global push for sustainability.

The aviation industry has witnessed a significant resurgence post-pandemic, fueled by increased passenger traffic, burgeoning demand for air cargo services, and rising investments in airport infrastructure.

However, the path forward is riddled with challenges such as escalating fuel costs, stringent regulatory requirements, and the urgent need for greener operations.

1. Infrastructure development for enhanced connectivity

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The aviation sector expects the government to prioritize infrastructure expansion to support both passenger and cargo growth. Regional connectivity schemes like UDAN have gained momentum, but further investments in Tier 2 and Tier 3 city airports are essential. Upgrading technology, expanding runways, and enhancing passenger amenities at smaller airports can unlock economic opportunities across the country

2. Rationalisation of taxes and ATF pricing

One of the long-standing demands of the industry is the rationalization of aviation turbine fuel (ATF) taxes, which constitute up to 40% of operational costs for airlines. A unified taxation framework, coupled with bringing ATF under GST, can provide the much-needed relief to carriers and help keep airfares affordable for consumers.

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3. Green initiatives and carbon neutrality

Sustainability remains a pressing priority, and the sector hopes for government incentives to promote the adoption of green aviation technologies. Budgetary allocations for research and development in sustainable aviation fuel (SAF), electric aircraft technology, and carbon-neutral airports can position India as a global leader in eco-friendly aviation practices.

4. Incentives for air cargo growth

The growing demand for e-commerce has propelled air cargo services into the spotlight. To sustain this momentum, the government should introduce policies that incentivize the development of dedicated cargo hubs, enhance cold chain infrastructure, and streamline regulatory procedures for smoother international trade.

5. Skill development and employment generation

The aviation industry is a major employer, and continued investments in skill development programs can bridge the talent gap and create new job opportunities. Initiatives to train pilots, engineers, and ground staff will strengthen the sector’s backbone and prepare it for future challenges.

Conclusion

Budget 2025 presents an opportunity for India to solidify its position as a global aviation hub. By addressing the industry’s core challenges—rationalizing fuel costs, enhancing infrastructure, and promoting sustainability—the government can unlock immense growth potential. With the right policy measures, the aviation sector can not only contribute to the country’s economic ambitions but also lead the charge toward a greener, more connected future.

The author is Director of Global Corporate Key Account Management at Saudia Cargo. Views expressed in the above piece are personal and solely those of the author. They do not necessarily reflect Firstpost’s views.