Flight number I5 784 had originated from Imphal. The plane landed at the T-3 terminal of Delhi Indira Gandhi International Airport at 3.30 pm.
When an alarm was raised by the cabin crew about the discovery on Thursday, a 19-year-old taekwondo player had admitted that she had lost the foetus.
The woman was sent for medical examination, but she refused to undergo tests.
The woman claimed she was not aware of her pregnancy and even her brother-in-law said her family was not aware she was pregnant, the officer added.
According to the police, a woman who boarded the plane in Guwahati delivered "a pre-mature dead foetus".
The police have sent the foetus for post-mortem and the woman has been sent for a medical examination. Her coach told the police he was neither aware of her pregnancy nor had she revealed about it in the documents she had filled for travelling in the flight.
It is suspected that the foetus was five-six months old, though an autopsy would help confirm the exact gestational age, the police said.
A senior police officer said, "The woman was called for questioning again and she said that she felt a continuous pain a day before boarding her flight and therefore consumed painkillers and antacids which led to excessive bleeding. We are consulting doctors if the medicines she consumed can cause any complications."
He also said that the there is a possibility that she might have sustained an injury while practicing Taekwondo that caused her child's death.
But she could not travel to South Korea for the tournament as the police has taken her passport for questioning her.
Police have registered a case under Section 318 of the IPC, which pertains to "concealment of birth by secret disposal of dead body" and is punishable with a maximum term of two years and a fine, he added. The woman was supposed to travel to South Korea for a tournament and was accompanied by her coach. Police have taken her passport and she will be questioned further, he said.
The cabin crew was doing a routine check of the lavatories when they found the foetus wrapped in toilet paper.
"A newborn infant was found lifeless and abandoned in one of the lavatories when the aircraft was being prepared for landing. Delhi Police were alerted and a doctor from the medical team at Delhi International Airport confirmed that the baby had been delivered onboard," it said.
The matter has been reported to the DGCA, the airline said.
"We will be assisting in the investigation and cooperating with all concerned agencies. AirAsia India would like to apologise to all guests experiencing disruptions in their flight schedule," it added.