“Approximately 80 per cent of India’s international air cargo is transported from just four airports that are equipped with international air cargo terminals – Chennai, Delhi, Kolkata and Mumbai – even though the expansive country has 454 airports and airstrips,” he told Payload Asia in an interview.
“The cargo traffic handled by the four airports is miniscule compared with the freight volumes handled in other major countries,” Bhatia says.
Major commodities exported as air cargo from India are sophisticated machinery components, pharmaceuticals, dyes, chemicals and perishables such as fruit, flowers, vegetables, fish and meat. Major air cargo import items for India include small packages, capital equipmentand technology goods.
New airport projects Recently, the Union government approved the creation of a joint venture firm, comprising Airports Authority of India (AAI) and Maharashtra government, to construct a multi-modal cargo hub at the Nagpur airport.
The decision, taken by the Union Cabinet, would enable the government to transfer the land owned by the AAI to the firm that is a JV between the state-owned airports body and public sector Maharashtra Airport Development Company (MADC), for creation of this hub.
“Approval has been granted to the establishment of the first joint venture (AAI-MADC) and transfer of the land and assets to it,” a government spokesman said. In this JV, AAI is to hold 49 per cent and MADC 51 per cent.
In another deal, Nedumbassery, a small village in Ernakulam district of Kerala, south India, is all set to takeup multifaceted development schemes, including a Centre for Perishable Cargo(CPC), which will have 25,000 tonnes ofcargo annually.
Similarly, the setting up of an air cargo centre near Indore airport, the largest city and the commercial capital of the central Indian state of Madhya Pradesh, is to offer cheap and quick transportation to local produce, including vegetables, fruits and flowers.
The Airport Authority of India has already provided the necessary land near Indore Airport to set up the air cargo centre. The aim is for local produce to be transported to different parts of India as air cargo.
Regarding domestic flights, an aviation official said only 12 planes serve the domestic air cargo market in India, but this is expected to grow at a rate of 9.1 per cent per annum.
Commenting on the rail sector, Bhatia said that the country’s overhead rail wires were built in such a manner that they could not cater for double or triple stack wagons. “And there is a limit to how many container wagons can be added to a train.’’
“For the first time, India has launched a dedicated freight corridor which will allow for double and triple stack trains,” Bhatia said. “But construction is not expected to be completed until 2011 or 2012.”
Border and Customs bottlenecks Road congestion and border checkpoint bottlenecks are another serious issue, Bhatia said. Checkpoint delays could take an average of four to six hours, but according to Bhatia, some firms paying under-the-counter money get their goods cleared within 15 minutes, a practice which is becoming popular.
Companies transporting cargo across India must also deal with the complex taxation system. Each of India’s 28 states collects a central sales tax and a local sales tax – recently replaced with a VAT (value-added tax) – which is a major source of revenue for them.
To ensure that a company pays both the central and local sales tax, a new permit must be obtained for each state before the trucks are allowed to cross state lines. Some states also impose Octroi, the equivalent of a local municipal tax, which needs to be paid in order to do business in that state.
The hill states also impose a separate entry tax on all trucks. In addition, the government has proposed the introduction of a new general sales tax.
Bhatia says that there was a general lack of understanding of supply chains and their associated costs. The big firms are typically the only ones to set up a supply chain department with a divisional head, a transshipment department, and a warehousing and forwarding department, he says.