PHDCCI Policy forum unveils Navigating the Skies: A Study of India’s Civil Aviation and Air Cargo Sector

The PHDCCI Policy Forum has released an insightful knowledge report shedding light on the transformative potential of India’s Civil Aviation and Air Cargo Sector. The report offers a comprehensive industry perspective, providing readers with a nuanced understanding of the sector’s current landscape, challenges, and untapped opportunities. Furthermore, it presents a strategic roadmap for the sector’s growth, emphasizing key recommendations that, if implemented, have the potential to elevate the industry to new heights and cement India’s position as a global leader in aviation and air cargo. As the prominent voice of the industry and trade, PHDCCI has undertaken extensive consultations with industry leaders, senior policymakers, and key stakeholders through a series of seminars, conferences, and meetings to bring forward this report.

India currently is the world’s third-largest domestic civil aviation sector, contributing approximately 5% to the country’s GDP and employing over 4 lakh individuals. There has been a strong rebound in the civil aviation sector in recent times with the passenger traffic touching almost pre-pandemic levels, underscoring the sector’s resilience and potential for growth.

The report also highlights India’s commendable progress in enhancing safety standards, elevating the nation to the 55th position in the Global Aviation Safety ranking by ICAO in 2023, a significant leap from its previous rank of 112. This achievement reflects the industry’s unwavering commitment to ensuring passenger safety and satisfaction.

Moreover, government initiatives, such as the PM Gati Shakti Mission, NCAP 2016, Krishi UDAN 2.0 and collaborative Public-Private partnerships, have not only facilitated substantial investments but also created the sector more affordable for the users and efficient for the industry.

However, the sector confronts multifaceted challenges, including rising airfare costs, intricate customs regulations, limited availability of wide-body aircraft, and substantial customs duties burdening air cargo companies. Additionally, the sector has grappled with the adverse impact of soaring Aviation Turbine Fuel (ATF) prices, which significantly contribute to operational costs. Addressing environmental concerns, the sector’s emissions are under scrutiny, necessitating the adoption of sustainable aviation fuel to curtail its carbon footprint.

Key Recommendations:

1. Creating Multimodal and Dedicated Transshipment Hubs to enhance the efficiency and cost-effectiveness of the sector.

2. Emphasizing Sustainability in Civil Aviation by implementing eco-friendly practices and transitioning to sustainable aviation fuel.

3. Streamlining Customs Clearance Processes by the implementation of a single-window customs clearance system and investment in advanced logistics software.

4. Rationalizing freight charges by airlines by consolidating their charges under one head to create higher transparency on charges to shippers and consignees

5. Rationalizing Cargo Tariffs and Freight Charges by simplifying cargo handling tariffs and enhancing transparency in freight charges.

6. Granting Industry status to Freight Forwarders and Custom Brokers

Mr. Sanjeev Agrawal, President PHDCCI while unveiling the report emphasized the importance of discussing the industry’s strategy, given India’s potential to emerge as a key player in the global aviation and air cargo domain. The civil aviation sector has the potential to bring down our logistics cost from 14% to the global benchmark of 8% of GDP. The recommendations proposed in the report are expected to pave the way for a more robust, sustainable, efficient, and inclusive future for the civil aviation and air cargo sector in India, he added.

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