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Strategic Analysis of Air Cargo Market Opportunities in India
Frost & Sullivan, Sep 2009, Pages: 114
Air Cargo Market in India Thrives with Economic Development and Rising International Trade
The rapid growth of international trade has boosted prospects for the air cargo market in India. The country’s merchandise export and import have registered a double-digit growth rate of 23 percent in 2007. Trade was growing at over 25.3 percent over the past five years, as a greater share of trade moved toward finished goods. Increasing globalization, establishment of manufacturing facilities, and India’s growing might in the information technology (IT) space have contributed to the boom in the country’s economy. This has resulted in an increased aggregate demand from India, driving the air cargo services market. 'Air cargo, trade and the gross domestic product (GDP) of a country have a direct relationship and are interdependent,' notes the analyst of this research service. 'Air cargo enables nations, regardless of location, to efficiently connect to distant markets and global supply chains in a speedy, reliable manner.'
Relaxation on the cap for foreign direct investment (FDI) in aviation bodes well for the Indian air cargo market. In the aviation sector, the FDI flow in the domestic scheduled passenger airline sector is expected to remain capped at 49.0 percent; however, for non-scheduled airlines, the FDI limit goes up to 74 percent, along with that for chartered and cargo airlines. The Government’s policies have been favorable toward the private participants entering the market. The major policies include 100 percent FDI permissible for existing airports and under automatic routes and 100 percent tax exemption for airport projects over a period of t0 years.
Inadequate Infrastructure Poses a Major Challenge to Air Cargo Movement
The lack of proper infrastructure is proving to be a roadblock to efficient cargo handling in the Indian air cargo market. Cargo warehousing facilities are not up to standards at India’s major airports, and most of these amenities are restricted to international freight. 'Domestic cargo operations have been largely limited because of non-availability of warehousing space in the Tier-2 and Tier-3 cities,' says the analyst. 'Very few private market participants have the license to operate bonded warehouses limiting the flow of investment.' Currently, India is upgrading its major airports, which account for 93 percent of the total international and 84.4 percent of the total domestic freight handled. The move is intended to satisfy international standards and provide world-class airports for business and the tourist industry. Once the infrastructure issues are addressed and the new cargo airports are made operational, the market will witness tremendous growth within the next 5 years.
Dwell time for import and export cargo at Indian airports is 3 to 5 days as compared to an average of 6 to 12 hours in other leading international airports. The state of customs clearing and delivery of cargo has remained a rough ride for cargo operators. Public-private partnerships (PPPs) at the major air cargo hubs are helping to develop the infrastructure according to international standards and increase the profit margins. India will soon develop into a transshipment hub with the upcoming Multimodal International Cargo Hub at Nagpur, which is designed to match the high international standards. It would greatly benefit Indian exporters in terms of reduction in dwell time, cost, and faster customs clearance and delivery of cargo.
Market Sectors
Expert Frost & Sullivan analysts thoroughly examine the following market sectors in this research:
- Infrastructure required for cargo handling at airports
- International air cargo traffic at Indian airports
- Bonded warehouse facilities at airports
This Frost & Sullivan research service titled Strategic Analysis of Air Cargo Market Opportunities in India provides the current market size, forecasts, key market drivers and restraints. In this research, Frost & Sullivan's expert analysts thoroughly examine the following: infrastructure required for cargo handling at airports, international air cargo traffic at Indian airports, and bonded warehouse facilities at airports.
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