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Indian airfreight expected to soar through 2018.

The Indian airfreight market is often described as an industry with great potential but little follow-through on planned projects. This may change over the next three years, according to a recent report by market research analysts at Frost & Sullivan.

At its present compounded annual rate of growth--5.5 percent--cargo demand in India is expected to boost the country's airfreight services capacity to 2.8 million tonnes by 2018, the report found. Most of this growth, however, will benefit foreign-owned, rather than domestic, carriers. The aggregate demand for air cargo, the analysts concluded, comes from a renewed emphasis on international trade over the last several years and a relaxation of regulations on the amount of foreign direct investment (FDI) allowed in India's aviation sector.

"The Indian government's FDI policies have been particularly favorable towards private participants entering the market," said Srinath Manda, program manager, transportation and logistics practice for Frost & Sullivan. "Major policies fueling 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."

India's merchandise export and import activity grew by an annual rate of 9.5 percent, on average, from 2009 to 2013, which helped drive the nationwide demand for air cargo to 2.26 million tonnes in FY 2014, the study found.

While growth has been strong, it has been hampered by the country's perennial lack of dedicated airfreight warehousing, Frost & Sullivan said. As a result, most warehousing facilities that exist cater to international, rather than domestic, cargo. Restrictions imposed on providing licenses to operate bonded warehouses have caused severe capacity constraints.

"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," Manda added.

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Title Annotation:Asia News
Comment:Indian airfreight expected to soar through 2018.(Asia News)
Author:Woods, Randy
Publication:Air Cargo World, International ed.
Geographic Code:9INDI
Date:Apr 1, 2015
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