Budget 2024: Here’s what air cargo industry wants from Modi 3.0 government

By Daanish Anand  July 19, 2024, 11:23:57 PM IST (Published)

India’s aviation sector is experiencing remarkable growth, now recognised as the third-largest in the world. This impressive expansion extends to India’s air cargo market, which has shown significant progress.

Recent data from the Airports Authority of India (AAI) reveals that in FY24, the air cargo sector witnessed a 7% year-on-year increase, with volumes rising to 3.4 million tonne. This growth was driven by a 10% surge in international cargo operations and a booming e-commerce business within the country.

For this positive trend to continue and improve in FY25, industry experts stress the need for government support, especially in the upcoming budget. The primary focus is on enhancing infrastructure in tier-II and tier-III cities.

Yashpal Sharma, President of Air Cargo Forum India, emphasised the necessity of upgrading tier-II and tier-III airports to the standard of city airports.

He stated, “We want the government to make tier-II & tier-III airports at par with city airports. Manufacturing has moved to the hinterland, government needs to invest more in tier-II & tier-III city airports with the right cargo infrastructure, equipment, and workforce. We want customs and PGAs to be there 24×7.”

Industry players also advocate for a reduction in compliance burdens and more affordable, accessible capital to support expansion plans, particularly for their clients in the MSME sector.

Vikram Kumar, Director General of the Air Cargo Agents Association of India, highlighted the challenges faced by MSMEs, which constitute about 90-95% of the industry.

He remarked, “For them, the cost of capital is very high, so we need processes which are simpler and easier. We have GST refunds which need to be processed much faster electronically, not manually.

For the service sector, GST refunds are being processed manually till now. I will give you taxes, I will do everything but rationalisation and simplification of tax regimes, lower corporate taxes, rationalisation of GST structures for the air cargo industry, which is hugely affecting us at 18%.”

Industry leaders are hopeful that the first budget of the Modi 3.0 government will address these concerns, given the government’s recent positive indications.

Piyush Srivastava, Senior Economic Advisor at the Ministry of Civil Aviation, stated, “Government is facilitating infrastructure creation through PPP. Infrastructure in tier II and III is being done by AAI. Government has eyes on the future, creating infra and policy so that we are ready.”

With the aviation sector booming and a substantial portion of cargo being transported in the belly of passenger aircraft, the air cargo industry anticipates robust growth in the coming years.

This optimism is further bolstered by Indian airlines’ orders for over 1,000 aircraft. Industry stakeholders believe that the government’s target of 10 million tonnes per year in cargo volumes by 2030 is achievable and could be reached even sooner with supportive budget measures.