All cheers for air cargo: AS­SOCHAM

Ac­cord­ing to the AS­SOCHAM-Yes Bank joint study, the do­mes­tic cargo in­dus­try has reg­is­tered a growth of 8 per cent at a CAGR dur­ing FY07-17, whereas in­ter­na­tional cargo grew at 6.2 per cent an­nu­ally.

Cargo Talk - - Report -

In In­dia, air trade to GDP ra­tio has dou­bled from four to eight per cent in the last 20 years. Air cargo con­trib­utes about 20 per cent of air­lines rev­enue. It should be treated at par with other lo­gis­tics sec­tor like roads which is sub­ject to 5 per cent tax rate. It is rec­om­mended that air cargo tax rate may be re­duced from 18.0 per cent and con­sid­ered for a lower tax bracket.

Fast ex­press

In­dian ex­press cargo in­dus­try pro­vides fast, re­li­able, on de­mand, in­te­grated and door-to -door (in­clud­ing cus­toms clear­ance and duty and tax) pay­ments. It is likely to grow man­i­fold in the com­ing years. As per IMF fore­cast, GDP growth in In­dia is fore­cast to grow at an av­er­age of 7.5 to 8.2 per cent dur­ing FY18-21 and thus air cargo could be at the cen­tre of sup­ply. To pro­mote growth in air cargo by way of cost re­duc­tion, ef­fi­ciency im­prove­ment and bet­ter in­ter-min­is­te­rial co­or­di­na­tion, Air Cargo Lo­gis­tics Pro­mo­tion Board (ACLPB) and AAI Cargo Lo­gis­tics & Al­lied Ser­vices (AAICLAS) have been formed. Cre­at­ing AAICLAS would bring mul­ti­ple ad­van­tages as there are lot of ac­tiv­i­ties on the cargo front. The open­ing of econ­omy, en­try of new air­lines, new routes, re­forms in gov­ern­ment poli­cies, ad­vanced tech­nol­ogy has helped In­dian air cargo to grow. But air cargo sec­tor in In­dia is still frag­mented and faces cer­tain chal­lenges, one among it is that air traf­fic in the coun­try is mainly con­cen­trated at only a hand­ful of air­ports. The chal­lenge lies in con­nect­ing cargo volumes of Tier 2 & 3 cities with ma­jor cities for air trans­porta­tion, which lacks ap­pro­pri­ate cargo in­fra­struc­ture. To pro­vide scope of ca­pac­ity ad­di­tion to the ex­ist­ing cargo play­ers, it is nec­es­sary to in­te­grate air­port in­fra­struc­ture with air cargo fa­cil­i­ties.

In­bound freight

The in­bound freight de­mand is not very strong but ex­ports see much higher util­i­sa­tion. Be­cause of in­tense com­pe­ti­tion, the ex­port rates have been low. Sub­stan­tial in­vest­ment is needed to de­velop ded­i­cated on-air­port cargo ter­mi­nals, air freight sta­tions.

GST im­pact

With the in­tro­duc­tion of GST, oc­troi has been re­moved. Thus, to pro­tect air cargo from the neg­a­tive im­pact, it is rec­om­mended that a con­nec­tiv­ity plan should be laid down. Un­der GST, while air­lines can claim in­put tax credit on all inputs (ex­clud­ing ATF), they can claim in­put tax credit only on in­put ser­vices. How­ever, there is no clar­ity if the ex­ist­ing ex­emp­tions would con­tinue or not un­der GST struc­ture.

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