When Prime Minister Narendra Modi’s cabinet recently opened the doors for the $75 billion UAE investments in India’s infrastructure, it also signaled the beginning of a project that had been hampered by a lack of funds. Set for establishment near Delhi’s international airport, the ECC or Exhibition-cum-Convention Centre is only a part of a project that includes an air cargo complex spread over 144 hectares of land. The project had been hanging in mid-air for four years owing to a dispute between two government bodies: the Delhi Development Authority and the Japan-funded Delhi Mumbai Industrial Corridor Development Corporation (DMICDC). Now, with the Cabinet directive, the land has been transferred and work can begin soon.
     Infrastructure has been emphasized as a top priority time and again by the Minister for Civil Aviation P. Ashok Gajapathi Raju. He stated that infrastructure and airlines had a great role to play for developing cargo hubs.
     “Now,” he said to his listeners at an air cargo seminar on transforming India’s airports into international cargo hubs, “is the right time to translate ideas into actions. We (the government) are eagerly looking for ideas from the industry players to work together. Let’s work together to turn our dreams into a reality.”

     That has brought cheer to air cargo stakeholders—both Indian and foreign—who have been harping on enhancement of infrastructure. However, it is time to take a look at the situation. To begin with, the economic reforms introduced by the government, improvement in transportation facilities, and industrial growth have not only created but also enlarged the opportunities for logistics service providers (LSP) in India. As a result, the Indian logistics industry has been seeing development and expansion of its existing infrastructure. Perhaps more importantly, the e-commerce boom has ushered in a whole new brand of logistics solutions.
     There is no doubt that the country has potential. Gopal R., Global Vice President, Supply Chain & Logistics Transformation Practice, Frost & Sullivan put it rather aptly when he mentioned that “India’s freight volumes are still not justifying our economic size. Ideally, we should be handling three to four times the freight volume that we handle today, in comparison to other countries with similar economic activity. This translates to huge potential, which can lead to transformational growth of the Indian logistics industry. We need to focus on ways to build this freight volume through enhanced infrastructure capacity, productivity, and process efficiency.”
     Frost & Sullivan’s recent study, ‘Indian Logistics Industry 2016 Outlook,’ has projected this potential: the logistics industry is likely to grow at a CAGR of 8.6 percent between 2015 and 2020. For its part, the government has also taken measures to bring in growth. The Foreign Trade Policy (2015-2020), for example, aims to increase the value of trade to US $900 billion by 2020. Exports will go up when manufacturers and others move ahead in step with government initiatives like ‘Make in India,’ ‘Digital India,’ and ‘Skills India.’
     The study mentions that while sea freight—more than 70 percent of international trade is through the country’s sea ports—could grow by 5.7 percent driven by demand from Asia, Europe, and Africa, international air freight is likely to grow at 12.5 percent against domestic air cargo— that comprises one-third of air cargo volume— which could grow by 2.3 percent in 2016. Under the 12th Five Year Plan (2012-17), an estimated US $11.4 billion has been allocated for airport modernization and expansion. For the present, 13 regional airports have been selected for infrastructure expansion.
     Delhi Airport’s head of Cargo and Chairman of The International Air Cargo Association (TIACA) Sanjiv Edward (left) would like the government’s commitment to “develop the infrastructure to make the industry grow.” The country needs to develop its gateways and that can only be done with a commitment to enhancing the infrastructure in “our gateways to get a place on the world map.”
     While the government is keen to do its bit—the Airports Authority of India, for example, has taken the responsibility of upgrading and enhancing the infrastructure of 25 airports in the country—it is the Public Private Partnership (PPP) model that has yielded results. In fact, the Economic Survey 2014-15 mentioned that the PPP model in Indian airports had witnessed a significant growth in infrastructure.
     The major initiatives to enhance the facilities came through PPP projects at four of the AAI-controlled airports at Chennai, Kolkata, Ahmedabad, and Jaipur. In addition, a number of Greenfield airports were constructed. Cargo throughput at airports in the country went up significantly: International cargo throughput increased by 8.3 percent and domestic by 19.3 percent in April-December 2014-15 compared with the corresponding period in 2013-14.
     All that air cargo stakeholders are looking at now is action on the ground. The general belief is that things will move once the National Aviation Policy is implemented. Until then, air cargo infrastructure will remain relegated to a simple cargo terminal at airports. As Sam Katgara (right) from Jeena and Company, one of the top freight forwarders, put it, “Cargo infrastructure is much more than the cargo terminal, but also includes special facilities for express freight, temperature-controlled goods, airmail, and hazardous goods.”
Tirthankar Ghosh