India: Prospective Air Cargo Hub?LogYcode
India is one of the fastest emerging economies of the world with its economic liberalization in the last two decades, FDI policies, a dynamic approach towards globalization and augmenting international trade. After a short glitch post the global economic slowdown from 2011-12 to 2013-14 when the Indian economy experienced moderate growth, the average growth rate from 2014-15 has been a whopping 7.5% which is much higher than the other emerging economies of the world.
India is already a paramount player in the global air cargo market with the major international air carriers having their operations from Indian cities for a considerable chunk of their business and revenue. One of the missing links that make India lag behind other major air cargo hubs like Hong Kong or UAE is the lack of full-fledged air cargo hubs. Hong Kong with a GDP of $360 billion handles air cargo traffic of 5.1 million tonnes, UAE with a GDP of $420 billion handles close to 3.4 million tonnes whereas India with a GDP of about $3 trillion, handles just close to 3.6 million tonnes.
The infrastructure, capacity, and technology of our international airport cargo terminals seek big-time improvement. The most required air cargo transshipment hub is only developed in Delhi airport and that too in recent times. We would require more transshipment hubs across India majorly in cities like Hyderabad, Mumbai, Bangalore which are gateways for international trade.
One of the major concerns is the unused capacity with the average weight load factor of air cargo being just less than 70% in India. The total volume of about 3.5 million tonnes per annum handled by all Indian airports is less than that handled by airports such as Memphis, Hong Kong, Shanghai, Incheon, Anchorage and Paris. The lack of air freight stations and bonded warehouses across India; road, rail and other inland means of connectivity not being at par with the other international air cargo hubs thereby hinders trade possibilities from even the most remote manufacturing hubs of the country. Despite India’s domestic and international trade growing multi-folds, we still lack seamless multi-modal connectivity across the country unlike Hong Kong, Dubai or other European hubs.
Government Policies to address constraints
The Indian Government’s initiatives like the introduction of GST negating 7 indirect taxes, ‘Make in India’, ‘Ease of Doing Business (EoDB)’ and so on are significant drivers in promoting India as a manufacturing hub and a destination for foreign investment. India needs to develop its transport and connectivity network coupled with smooth, uninterrupted and infallible entry and exit processes through airports and customs. The government and the logistics players should focus on the complete logistics value chain, that is providing an end to end sailing network channel with minimal dwell hours at airports, robust inland network and digital gateways reducing paperwork.
The Future of Logistics in India
As observed in the joint study by Assocham and Auctus Advisors, “The Indian cargo industry needs to grow at a rate of about 12.9 percent every year from 2018 to 2027 to achieve National Civil Aviation Policy (NCAP 2016) vision of reaching cargo volumes of 10 million tonnes (MT) by 2027”. As per the 2018 IBEF report, “growth in import and export in India will be the key driver for growth in freight traffic as 30 percent of total trade is undertaken via airways” and “India’s domestic and international aircraft movements grew 14.40 percent YOY and 9.40 percent YOY to 1,886.63 thousand and 437.93 thousand during 2017-18, respectively”. Also, Indian Government’s plans to increase airports to 250 and number of transshipment hubs as per the proposed NCAP, we expect to see a phenomenal change in the global outlook for India as an air cargo hub in the forthcoming 5 – 7 years