More than 200 people – including 53 British nationals – were on board Flight AI171 to London Gatwick.
The video shows the aircraft taking off from Ahmedabad Airport in the northwestern Indian state of Gujarat.
But just seconds after the plane is airborne, it can be see struggling to gain altitude and instead begins descending towards buildings, with its wheels still out and its nose is raised.
A huge explosion and thick black plumes of smoke can be seen rising into the skies.
India plane crash latest: Follow live updates
Footage that emerged earlier today, taken from what appears to be a property, showed the aircraft descending over a residential area.
It crashed in an area called Meghaninagar at 1:38pm local time on Thursday, according to Faiz Ahmed Kidwai, the director general of the directorate of civil aviation.
Flight tracking website Flightradar said a signal was last received from the aircraft less than a minute after take-off.
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Air India said 242 people were on the flight. Passengers included 169 Indian nationals, 53 British nationals, seven Portuguese nationals and one Canadian national. India’s CNN News18 TV channel reported there 12 crew on the plane.
In a statement, London Gatwick said the flight was due to land at 6.25pm local time on Thursday.
India’s civil aviation minister Ram Mohan Naidu Kinjarapu said: “Rescue teams have been mobilised, and all efforts are being made to ensure medical aid and relief support are being rushed to the site.”
