Source : Frost & Sullivan
Tuesday, February 24, 2015 10:47AM IST (5:17AM GMT)
International Trade Growth and Relaxation of FDI Cap Fuel Indian Air Cargo Market, Finds Frost & Sullivan
The development of common user cargo terminals and perishable cargo storage facilities represent key areas of opportunity
Mumbai, Maharashtra, India

Increased aggregate demand due to encouraging international trade and gross domestic product (GDP) trends has been the primary driver of air cargo services in India. This comes as no surprise as the country’s merchandise export and import registered a double-digit average annual growth rate of 9.5 percent during the fiscal year (FY) 2009-2013 period, while GDP grew at a compound annual growth rate of more than 6 percent within the same timeframe.
New analysis from Frost & Sullivan, Strategic Analysis of Growth Opportunities in Indian Air Cargo Market, finds that the total market opportunity for air cargo services in the country amounted to 2.26 million tons in FY 2014 and is estimated to reach 2.8 million tons by FY 2018 at a compound annual growth rate of 5.5 percent. The study covers domestic and international air cargo.

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“The relaxation of the cap on foreign direct investment (FDI) in the aviation sector has given a strong thrust to the air cargo market,” said Srinath Manda, Program Manager, Transportation & Logistics Practice, Frost & Sullivan. “The Indian Government’s FDI policies have been particularly favorable towards private participants entering the market. Major policies fuelling market growth include the allowance for 100 percent FDI in existing airports and under automatic routes as well as 100 percent tax exemption for airport projects for the next ten years.”
However, the lack of dedicated air cargo warehousing facilities at India’s major airports has slowed down market development. Domestic air cargo operations have been limited as most warehousing facilities cater to international cargo owing to the dearth of space in tier II and III cities. Further, the restrictions imposed on providing licenses to operate bonded warehouses has been causing severe capacity constraints and impeding the air cargo market.
Nonetheless, market momentum will pick up soon as the Airport Authority of India (AAI) has identified 24 airports in which unused cargo terminals can be converted to common user domestic cargo terminals. Along with the AAI’s program dedicated to establishing centers of perishable cargo to cope with the rise of domestic air cargo movement involving perishable goods, this will keep market revenues on a steady upward trajectory.

“Evidently, opportunities for market participants lie in common user cargo terminal development and management at airports, domestic air cargo carrier services, commercial and passenger cargo handling at airports, and perishable cargo storage facilities development and operation,” concluded Manda.

Strategic Analysis of Growth Opportunities in Indian Air Cargo Market is part of the Transportation & Logistics ( Growth Partnership Service program. Frost & Sullivan’s related studies include: Strategic Analysis of Project Logistics Market in India, Logistics Spend, Outsourcing, and Technology Usage Trends in India, and Strategic Analysis of Temperature Controlled Logistics (TCL) Market in India. All studies included in subscriptions provide detailed market opportunities and industry trends evaluated following extensive interviews with market participants.
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