Sleeping giant: Infrastructure needs impede India’s airfreight progress
India seemingly has all the ingredients to be one of the world’s great air cargo centers. Rapid growth of international trade, a huge manufacturing engine and a population of more than 1.2 billion all bode well for the industry. However, for a variety of reasons, India has not realized this great potential.
Participants in India’s air cargo sector agree that inadequate infrastructure in the country is the major obstacle, followed by cost inefficiencies and the need for governmental and tax reform. But they are also optimistic that the needed changes will eventually happen.
“The air cargo market in India has the potential to become a global hub, but poor infrastructure and [lack of] cost efficiency are the major challenges to growth,” says Shailendra Seth, head of India operations for charter cargo specialist Chapman Freeborn. “However, this segment is growing at a fast pace and will give a tremendous boost to the economy. In the past years, aviation industry has seen many transformations.”
Seth says the Indian charter market is growing, but is short on “professional players.” He says trade has grown over the past five years as a greater share of trade moved toward finished goods. Products driving the growth include pharmaceuticals, gems and jewelry, transport equipment and ready-made garments, he says.
Sam Katgara, owner of Mumbai-based Jeena & Company, one of India’s prominent freight forwarders, says a third of India’s exports travel by air. He maintains that the Indian government has made significant efforts to upgrade infrastructure, but much more is needed. He expects the demand for air cargo to continue to rise.
“With the economy booming and rising GDP growth, air cargo witnesses a huge growth,” Katgara says.
The government’s ongoing effort to develop infrastructure, the easing of regulations for foreign investment in aviation and the introduction of cargo hubs and Special Economic Zones figure to provide momentum for the growth of air cargo in the coming years, he says.
Katgara adds that air cargo is not recognized as an industry by the Indian government, which has not shown a strong commitment to making it efficient and viable.
“Airports were developed primarily from the passenger standpoint, and thus requirement of cargo facility development was not taken seriously,” Katgara says. “Cargo is generally the last part to be thought of and is relegated to that part of the airport, considered not important otherwise. This leaves the entire logistics of cargo – infrastructure and facility – in woefully inadequate and poorly-managed area of the airport.”
Katgara notes that cargo infrastructure is much more than the cargo terminal, but also includes special facilities for express freight, temperature-controlled goods, airmail and hazardous goods. He says development of “cargo villages” is essential for India’s major airports.
Ashish Kapur, India-based regional cargo manager for Cathay Pacific, says the rise of India’s middle class and subsequent increase in demand for imported items such as high-end fashion and electronics has imports growing faster than exports. However, he says India’s weakening currency should help boost exports. Pharmaceutical products are a key driver of exports, followed by machinery and automobiles, he says.
Kapur agrees that improved infrastructure is the industry’s greatest need. He cites airports such as Bengaluru International Airport near Bangalore and Hyderabad International Airport as having modern cargo facilities and notes that improvements have been made at Indira Gandhi International Airport in New Delhi. Kapur says cargo remains a challenge at airports that serve big export markets such as Chennai International Airport and Chhatrapati Shivaji International Airport north of Mumbai.
India should also expedite adoption of E-freight and off-airport customs bonded warehousing, Kapur says.
Pukhraj Chug, managing director at Group Concorde, a general services agent company based in Gurgaon, near New Delhi, believes India is poised for growth in both domestic and international air cargo.