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.
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.
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.
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.
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.