Indian Air Cargo Market: Current and Future Trends

Air Cargo Industry in India is currently at its nascent stage with few local and foreign players dominating the market. This industry is very unorganized and price-sensitive where players compete on lower tariffs. Cargo business in India faces infrastructure constraints that limit the growth of air cargo and results in shipments delays due to air traffic congestion.

For the outgoing International air freight, the Indian Government has implemented an open sky policy where any airline, foreign or Indian, can transport any amount of cargo between India and other countries without any capacity constraints, provided the airport which they are operating from has the necessary immigration facilities.

In order to boost air cargo market in India, AAI (Airports Authority of India) has prepared a development plan for the next 10 years and has started implementing projects to create modern cargo hubs across the country. The fully-fledged modern cargo handling system at Kolkata airport, MIHAN (Multi-Modal International Cargo Hub) project at Nagpur airport, construction of various Special Economic Zones (SEZ) are some of the initiatives taken by the government towards air cargo development.

Future Trends

There is a high scope for entry of new participants because of the low regulations, lower capital requirement, lower need for skill and expertise, and other low entry barriers. The competition will intensify with rising domestic start-ups and international players entering the Indian freight forwarding market.

With the initiated development plans taken by the government to promote air cargo;

Introduction of dedicated new generation freighter aircrafts and logistics integrators with business models of global standards are expected.

Air cargo sector is highly correlated with India’s GDP. With the economy booming and rising GDP growth, air cargo witnesses a huge growth. The continuous effort by government to develop infrastructure, easing regulations to allow foreign players, increasing service sector participation in India’s economy and introduction of various cargo hubs and SEZ; the demand for air cargo is expected to rise in the future.