Indias air cargo sector set to boom

INDIAN air cargo, which until now has remained negligible, is set to change in the next three to four years as the Indian government liberalises the country’s aviation sector.

New analysis from Frost & Sullivan shows that India’s total domestic and international air cargo market, which in 2007/08 was 1.77 million tonnes, is expected to grow at a compound annual growth rate of about 8.3 per cent by 2013 following the move.

“Increasing globalisation, integration of the world economy and the strengthening of India in the IT service provider space has resulted in a booming Indian economy, supporting a thriving global economy,” said Frost & Sullivan analysts Arun Narayanan and Chethan Kambi. “This has increased the aggregate demand and is an important driver for air cargo services.”

When the government lifts the 74 per cent stake limit for overseas investors in Indian cargo airlines much-needed capital and global best practices will be brought to India’s air cargo industry.

The analysis suggest that market participants will need to focus on establishing integrated air cargo infrastructure, such as warehouses and storage facilities across the country, as well as improving aviation facilities for cargo handling and increasing the country’s freighter fleet.

“On an average, the airfreight traffic growth has been significantly higher than the gross domestic product growth rate and this trend has been rising over the years,” said Narayanan. “This is the result of an increasing use of the aerial mode to transport freight, particularly perishables and time-sensitive products. The policy framework of the government in this sector, notably the liberal bilateral agreements, open-sky policy for air cargo, relaxation of foreign direct investment limits etc, have also helped in generating higher traffic growth.”

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