Air Cargo India: tonnage set to increase significantly

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The Indian air cargo industry will see significant tonnage growth over the next decade and a half, according to a government advisor.

Speaking at Air Cargo India at the Grand Hyatt Hotel in Mumbai in a keynote address, government senior advisor for the Ministry of Civil Aviation, Renu Singh Parmar forecasts huge growth and says the potential of the industry is huge.

She says India’s cargo tonnage throughput was 2.58 million tonnes in 2014/15,but in 2020/21 in will be 4.2 million tonnes, before rising to 5.25 milion tonnes in 2023/24 and 8.75 million in 2030/31.

Much of the market expansion Parmar forecasts will come through e-commerce, which will reach $36 billion in India in 2016, up from $16 billion in 2014 and it will hit $100 billion by 2020.

She explains India is the second fastest growing air cargo market in the world and the growth rate is being driven by the developing population and consumer demand, and Parmar says it is the “land of opportunity”.

In 2015/16 growth is forecasted in the Indian air cargo market to be around 6.7 per cent – the domestic market by 6.3 per cent and the international sector by 6.9 per cent.

This growth according to Parmar, comes despite exports declining but expansion is being fuelled by imports as the Indian middle-class consumer demand increases.

Parmar says the government’s has a new aviation policy to expand the air cargo industry, which includes developing cargo hubs, encouraging cargo villages, reducing dwell times to 48 hours for imports, shifting to paperless cargo processes, introducing 24/7 customs for the processing and handling of freight, developing free trade zones and providing space on long-term leases to express cargo freighters.

Other plans would benefit firms which are co-located at airports, Parmar says, who in new plans could be given ‘infrastructure status’ which would give them a 10-year tax break.

Gaining foreign direct investment (FDI) is a big part of the strategy to grow the economy, and the government has increased the FDI caps on airfreight operations to 49 per cent without government approval and 74 per cent if approval is desired.

Parmar says India is in the top 10 countries now in the world for FDI, which is being driven by manufacturing – and in 2022 it will represent 25 per cent of India’s GDP.

The country has attracted around $26.5 billion in FDI in the first nine months of 2015 which is 18 per cent more than in the same period the previous year.

All the measures to boost the economy and the air cargo industry are part of the Indian government’s ‘Make in India’ initiative.

Parmar says all the improvements in processes and the changes will make it “easier to do business” in India for both domestic and international firms. She proudly predicts that India will be the largest economy in the world by 2030, and surpass China.

GDP growth in India was 7.5 per cent in 2015, which was above China’s 6.7 per cent – making India the fastest growing economy in the world.