Ease of doing business: Government in talks with industry stakeholders to ease air cargo processes, boost volumes

“We have been putting a specific focus on the air cargo segment for the last six months. We are looking at ways to increase participation of freighters, assessing cargo throughput of the top 20 Indian airports, and other ways to improve efficiency and create a competitive market," a senior official involved in the ongoing discussions told Mint.

The government hopes to make concrete progress on these proposals within a year, the official added.

According to data from the Airports Authority of India, all operational airports handled 3.4 million tonnes of freight in 2023-24, including 2 million tonnes of international freight. It is also important to note that the government has set a target of handling 10-million tonnes of air cargo per year by 2030.

Doubling down

As part of the discussions with stakeholders, the civil aviation ministry is also evaluating various methods to enable a smoother process for foreign freighter operators to carry cargo to and from multiple points in India, the official added. 

Under the current framework, Indian freighter operators are allowed double dipping, a term used in the industry to explain how cargo meant for imports or exports is carried to and from more than one city in India. 

Also read: Air India eyes 20% share in air cargo biz in 2-3 years

For example, a domestic freight operator can take cargo from Delhi, then fly to Mumbai, take cargo from there, and then fly to its destination abroad. However, international freighter operators are approved on a case-by-case basis only.

“We are in a very open, competitive world today. The most critical and biggest shareholder in the entire chain is the customer—the shipper. For India to be(come) the factory of the world, we need to think beyond one cargo stakeholder," said Yashpal Sharma, president of Air Cargo Forum India (ACFI).

Creating capacity

“Indian carriers have to boost their capacity to service the Indian business demand. The entire air cargo ecosystem needs to create facilities and capacities backed by effective regulatory framework for Indian shippers to create India—the factory to the world," he added. 

The domestic air cargo traffic grew 4.4% between 2012-13 and 2022-23, while international air cargo traffic grew at just 2.1% during the same period. However, capacity constraints remain for Indian carriers in the cargo space. 

The latest annual cargo data from the Directorate General of Civil Aviation (DGCA) shows that Indian carriers carried only 12.7% of the international cargo flying to and from India in 2022-23, while their share was 15.5% in the year before that. 

In contrast, the global air cargo market is growing at a healthy pace, with an year-on-year increase of around 15% in total demand in May 2024. The Asia-Pacific region, which contributes 33% towards the global air cargo market, saw a 17.8% year-on-year growth in demand for air cargo services in May this year.

Air cargo is carried in the belly of passenger aircraft and also by private or non-scheduled as well as scheduled freighters. 

Also read: Sluggish Europe, US hit air cargo exports from India

In India, IndiGo and SpiceJet have around 5-6 aircraft for cargo operations, while Blue Dart and QuikJet, among others, are scheduled domestic freighter operators. 

The belly capacity of scheduled carriers is also set to increase, as domestic airlines such as IndiGo and Air India, among others, have placed orders for a number of wide- and narrow-body aircraft to be delivered in the next few years. 

Removing red tape

Separately, the civil aviation ministry has also assessed ways to increase the efficiency of shipping procedures and minimise the paperwork required during the process. 

It has held discussions with the Directorate General of Foreign Trade and the Central Board of Excise and Customs over the same, a second official said.

“Presentations have been made on the impact of e-KYC and digital shipper invoices. We are assessing these with the stakeholders," the official added.

Under the current framework, an exporter has to provide a full KYC (know your customer) to a custom broker, with whom it has engaged for a particular shipment. However, the exporter will have to repeat the entire process of providing its KYC whenever it chooses a new custom broker. 

Apart from the KYC process, the government has also held consultations on the prospect of standardising the e-invoice format for shippers, which can spur better collaboration among stakeholders in the industry.

“We need to have data flowing instead of paper flowing. We should be able to push data across," ACFI's Sharma noted.