13.05.2025

How India’s UDAN Scheme Is Boosting Domestic Air Cargo in Tier-2 and Tier-3 Cities?

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India’s UDAN scheme is transforming domestic air cargo by connecting Tier-2 and Tier-3 cities to major logistics hubs. It’s opening new opportunities for local businesses, farmers, and MSMEs across the country.

How India’s UDAN Scheme Is Boosting Domestic Air Cargo in Tier-2 and Tier-3 Cities?

India’s aviation landscape has witnessed a transformative shift with the introduction of the UDAN (Ude Desh ka Aam Nagrik) scheme. Launched in 2017 under the Ministry of Civil Aviation, UDAN aims to enhance regional air connectivity by making air travel affordable and widespread. While its primary focus was on passenger connectivity, the scheme’s extension into air cargo is unlocking significant value—especially for Tier-2 and Tier-3 cities. These smaller cities, long underserved by traditional cargo routes, are now emerging as key nodes in the domestic logistics network.

1. UDAN 4.0: A Focus on Air Cargo

In 2020, the UDAN scheme took a leap forward with a dedicated focus on cargo routes under the Krishi UDAN and UDAN 4.0 initiatives. This shift aimed to:

Facilitate agricultural and perishable goods transportation.
Improve logistics efficiency in remote and hilly regions.
Strengthen regional trade and MSMEs by offering air freight access.

The government’s support in terms of subsidies, tax incentives, and infrastructure upgrades made the proposition viable for cargo operators and airlines alike.

2. Empowering Tier-2 and Tier-3 Cities

Before UDAN, many Tier-2 and Tier-3 cities lacked the infrastructure or demand density to justify regular air cargo operations. The scheme has changed this dynamic in the following ways:

Infrastructure Development: Small airports have been revitalized or newly developed with cargo terminals and cold storage facilities (e.g., Darbhanga, Jharsuguda, and Belgaum).
Increased Frequency and Accessibility: Cities like Hubli, Agartala, and Jabalpur now see more regular air cargo operations, connecting them to metros like Delhi, Mumbai, and Kolkata.
Empowering Local Businesses: Farmers, artisans, and SMEs can now ship products faster—be it flowers, fish, textiles, or medical goods.

3. Sector-Specific Benefits

Agriculture & Perishables:
Krishi UDAN has played a key role in enabling farm-to-market movement for perishable items. Cities in the Northeast and tribal regions are now able to export fruits, vegetables, and spices efficiently.

E-Commerce & MSMEs:
Tier-2 and Tier-3 cities are booming hubs for e-commerce orders. Faster deliveries from these regions help in:

Reducing return cycles
Increasing customer satisfaction
Enabling reverse logistics for goods and services

Healthcare & Pharma:
Smaller cities often struggle with timely access to critical supplies. Air cargo has proven crucial in transporting life-saving drugs, vaccines, and diagnostic equipment, especially post-pandemic.

4. Strategic Collaborations and Investments

Public-Private Partnerships (PPPs) have enabled airlines, airport operators, and logistics providers to invest in regional air freight infrastructure.
Companies like India Post, SpiceXpress, and Blue Dart are leveraging UDAN-enabled routes to serve remote markets.
The AAI Cargo Logistics & Allied Services Company Ltd. (AAICLAS) is playing a pivotal role in handling cargo operations at smaller airports.

5. Challenges and the Road Ahead

While the UDAN scheme has sparked positive momentum, certain challenges remain:

Limited warehousing and handling capacity at regional airports.
High operational costs for airlines on low-demand routes.
Need for digital integration and tracking systems across multimodal networks.

To overcome these, the government is working on:

Phase-wise upgrades of cargo terminals
Offering financial incentives for cargo-only aircraft
Promoting collaborative logistics hubs for shared services

Conclusion

The UDAN scheme has redefined the air cargo landscape of India by bringing Tier-2 and Tier-3 cities into the national freight grid. With growing demand for speed, connectivity, and efficiency, these cities are no longer on the fringes but are rising as new logistics frontiers. As infrastructure continues to evolve and public-private collaboration deepens, UDAN's role in shaping the future of regional air cargo is only set to grow.