The air cargo sector in India has experienced significant growth in recent years. The industry has been witnessing an upward trend due to various factors, such as a buoyant national economy fueling internal trade, e-commerce growth, and the rise in demand for perishable and time-sensitive goods. Key trends include the adoption of advanced technologies like track-and-trace systems and the digitization of documentation. We are not far from the use of unmanned aerial vehicles for last-mile delivery on a mass scale.
However, the industry also faces several challenges, like infrastructure constraints, limited or constrained cargo handling capacity at airports, and high operational costs. The government is committed to easing regulatory procedures and streamlining customs clearance processes to ensure unhindered and sustained growth.
Major initiatives for growth in India
The government has undertaken several initiatives to promote and enhance the air cargo sector in India. These include:
The launch of the new National Logistics Policy, which focuses on boosting air cargo infrastructure and simplifying regulatory frameworks, Major airports in the country have been developed in the PPP mode, wherein they have state-of-the-art cargo handling facilities. In addition, the government is developing new cargo terminals through AAICLAS, a wholly owned subsidiary of AAI. Cold storage facilities are also being created as required for maintaining the cold chain for perishable cargo. Moreover, at places where cargo terminals are not available, cargo movement is allowed through passenger terminals after regulatory clearances.
The establishment of the Air Cargo Community System (ACS) facilitates seamless information exchange and collaboration among stakeholders in the air cargo supply chain.
The introduction of the e-Freight programme aims to digitise documentation processes and enhance efficiency in cargo operations.
The opening of Air Freight Stations has the potential to deepen the penetration and democratisation of air cargo operations in the country.
Collaborations with industry stakeholders such as airlines, freight forwarders, and logistics companies are essential to driving innovation and promoting the use of advanced technologies in air cargo operations for rapid and efficient growth of the air cargo sector.
The government is cognizant of the importance of integrating e-commerce and air cargo to meet the growing demands of the industry. Several developments on this front support this integration:
- The establishment of dedicated e-commerce units at airports to cater specifically to the needs of e-commerce shipments
- The development of specialised infrastructure such as fulfilment centres and cargo hubs to handle e-commerce cargo efficiently
- The facilitation of customs clearance procedures for e-commerce shipments through initiatives like the e-SANCHIT platform allows for the electronic submission of customs documents.
- The collaboration between airlines, e-commerce platforms, and logistics providers is the ‘sine qua non’ to develop innovative solutions for last-mile delivery and enhance supply chain visibility.
Tackling costs and regulations
The government acknowledges the importance of rationalising operational costs and easing regulatory burdens to enhance the competitiveness of the air cargo industry. The first step in this direction is building transparency and removing the information asymmetry between government and industry. In this regard, the Ministry has institutionalised the process of stakeholder consultation in addition to being open to one-on-one interactions with various players in the cargo sector. This engagement with industry stakeholders helps us understand their challenges and concerns and work collaboratively to find solutions.
Conducting regular reviews of regulatory frameworks also helps identify and eliminate unnecessary bureaucratic hurdles and streamline processes.
We are separately implementing initiatives for ease of doing business, such as digitising documentation processes and adopting electronic platforms for customs clearance.
We encourage industry collaboration to share best practises for cross-learning and collectively address various challenges faced by the air cargo sector.
The government is committed to easing regulatory procedures and streamlining customs clearance processes to ensure unhindered and sustained growth
Foreign investment boost
The government has implemented several policies and incentives to attract foreign investments and enhance collaboration in the Indian air cargo sector. These include:
- Allowing 100% foreign direct investment (FDI) under the automatic route for cargo airlines, subject to certain conditions.
- Facilitating international partnerships and collaborations through bilateral agreements, air service agreements, and memoranda of understanding with other countries
- Organising trade fairs, conferences, and industry events to showcase investment opportunities in the Indian air cargo sector and promote networking among domestic and foreign stakeholders
The march of technology and digitalization in all walks of life is inevitable. This includes the air cargo sector, which will play a crucial role in transforming the air cargo industry in India. The government recognises this and is actively encouraging the adoption of advanced technologies. Some key initiatives include:
- The government is implementing electronic data interchange (EDI) systems and digital platforms for seamless communication and data exchange among stakeholders.
- Private sector players in air cargo logistics have been embracing automation and robotics in cargo handling processes to enhance operational efficiency. The use of track-and-trace systems and real-time cargo monitoring solutions to enhance visibility and improve supply chain efficiency has to be the norm.
- The adoption of artificial intelligence (AI), machine learning (ML), and data analytics to optimise cargo routing, demand forecasting, and resource allocation is the future. Eventually, we will increasingly see the use of unmanned aerial vehicles (UAVs) or drones for last-mile cargo delivery, especially in remote or inaccessible areas.
The government has various schemes implemented by different Ministries that seek to establish innovation centres and incubation hubs to foster research and development and facilitate collaboration between industry players, academia, and technology providers. Additionally, skill development programmes and training initiatives are being implemented to enhance the digital literacy and technological capabilities of the workforce in the air cargo sector.
India’s Future Vision & Policies
The government envisions a future for the air cargo sector in India that is robust, efficient, and globally competitive. Some key areas of focus and upcoming policies and initiatives include:
- Continued investment in infrastructure development to expand and modernise existing airports, cargo terminals, and logistics facilities.
- Enhancing connectivity through the development of regional air cargo hubs and improving last-mile connectivity in underserved areas
- Strengthening collaboration with industry stakeholders, including airlines, freight forwarders, and logistics providers, to drive innovation, share best practises, and foster a collaborative ecosystem
- Prioritising sustainability by promoting greener practises, reducing carbon emissions, and exploring alternative fuels and technologies
- Streamlining regulatory frameworks and customs clearance procedures to reduce bureaucracy and enhance ease of doing business
- Encouraging research and development in advanced technologies like AI, ML, and blockchain to further improve operational efficiency and enhance supply chain visibility.
The opening of Air Freight Stations has the potential to deepen the penetration and democratisation of air cargo operations in the country