By Ajay Singh
The international air cargo business is a USD 117 billion business that deploys more than 1,870 freighters. Combined with the pre and post air-freighting activities that are ancillary to air freight, custodian services, ground handling, cargo handling, and transit warehousing, the air cargo business is worth more than USD 1 trillion. Of this, the Indian air cargo business is estimated to be USD 8 billion, a mere .8%.
India is advantageously positioned from a geographic point of view, situated as it is among the manufacturing hubs to the east and south east of Asia, and with the consumption centres in Europe and the Americas. The National Air Cargo Policy 2019 (“NACP”) rightly proposes to capitalise on this benefit by highlighting the creation of transportation hubs at all big Indian airports in the run up to 2025.
The Krishi UDAN scheme launched by the Government of India (“GoI”) has connected farmers from regions with sporadic and problematic road and rail connectivity, thereby lengthening transit occasions, to the major consumption centres of India by way of air cargo. The Ministry of Civil Aviation’s (“MoCA”) Incentive Scheme has benefited the shippers, farmers, and the regional airports. This has helped the domestic air cargo business develop and establish itself as a feasible mode of transport of perishable commodities.
The air cargo business wants additional promotion, and is capable of acting as a force multiplier in attaining India’s vision of a USD 5 trillion economy. The GoI has, by way of policy intervention, assisted its development by withdrawing the unrestricted Open Skies Policy to market Indian Carriers, like restriction of non-scheduled operations of foreign carriers to the six big metros of India, on a case to case basis.
During this COVID-19 pandemic, which has wrought devastation across the nation each from a humanitarian and financial standpoint, the aviation sector, and in unique the air cargo business has emerged as a uncommon good results story.
During the lockdown when other modes of transport have been constrained, air cargo helped sustain essential provide chains, like for the transport of meals, medicines and other important commodities, each inside the nation and from all about the world. Air cargo was a lifeline for our farmers, like our marine and aquaculture farmers.
The last fiscal year has witnessed an unparalleled development spurt in air cargo in India. The quantity of freighters becoming operated by Indian carriers has elevated from 5 as of March 2020 to 25 as of today, and the share of cargo carried into and out of India by sovereign flag carriers has elevated from 2% to 19%. For the initially time, an Indian flag carrier has broken into the leading ten carriers of cargo from India in the WorldACD air cargo rankings.
Enlightened policy creating of the GoI and the MoCA has provided India a tremendous chance to produce huge income from air cargo and retain the GDP generated from its personal website traffic inside the nation, rather than have it distributed amongst international carriers and foreign nations.
To encourage and market the promising air cargo sector in the nation and give a additional increase to initiatives such as the Krishi UDAN Scheme, the GoI may possibly think about proactive policy intervention. Some of these actions can be:
1. Exempt landing, parking and navigation charges for all cargo aircraft operated by Indian carriers for a period of 3 years.
2. Exempt excise duty on aviation turbine fuel for all cargo aircraft operated by Indian carriers for a period of 3 years.
3. Partner with states and request an exemption of VAT on aviation turbine fuel for all cargo aircraft operated by Indian carriers for a period of 3 years.
4. Approach the GST council and request that transport of goods by air be topic to GST at a price of 5% in line with the transport of goods by other modes such as rail and road.
5. Self-handling of cargo to be permitted at AAI and private airports to Indian carriers operating 5 or more freighter aircraft. In some airports, the expense of outsourcing these activities to a widespread user terminal (“CUT”) as is normal practice is prohibitively costly. For instance, the expense of processing cargo at the Reduce at Ahmedabad Airport is Rs. 8 per kg, which is larger than the expense of road transport from Delhi to Ahmedabad.
A essential measure that can be implemented in order to reach the USD 5 trillion economy is to optimise the use of India’s multi-modal infrastructure. India has the fourth biggest railway network in the world, and by complementing air freight, this can provide substantial fillip to this vision. Cargo shippers are of late vociferously demanding expeditious connectivity at reduce charges, which can be accomplished by connecting the air cargo network to the Indian Railways network. Additionally, railways can connect big sea-ports, airports and railway hubs. This can give Indian as properly as international shippers a vast Air-Sea-Rail network, with quite a few probable combinations of transit occasions, charges and comfort to transport their shipments.
India’s neighbours, specifically Bangladesh, Sri Lanka and Myanmar, are big manufacturing hubs, and have sizeable international trade with Europe and the United States. These nations have restricted air connectivity to the consumption centres, and the multi-modal connectivity that the Indian logistics network can provide can be an benefit to these nations, as properly as the Indian logistics and infrastructure business.
The air cargo logistics and fulfilment business is a sunrise sector with a huge prospective to produce income and build jobs in India. We require to work with each other to realise this prospective and create an business that we can all be proud of.
(The author is CMD, SpiceJet. The views expressed are his personal and not necessarily that of TheSpuzz Online)