India Explores Cargo-Only Airports at Major Cities

Mar. 19 -- NEW DELHI -- The civil aviation ministry is framing a policy for development of airports exclusively for cargo operations. The proposal is expected to give a much-needed boost to the air cargo segment, which has lagged behind even as the Indian aviation sector has witnessed double-digit growth.

Official sources told ET the development of such exclusive airports will attract substantial private investment in the cargo segment. The civil aviation ministry has started identifying the requirements of different sectors -- ranging from those trading in perishable goods to consumer durables -- to help formulate the policy, sources added.

While Nagpur is being developed as a cargo hub, the government now plans to build cargo airports at main locations or business centres. The move is significant since a host of private companies, including Reliance and the Tata group, have recently shown interest in starting dedicated air cargo services.

The policy will also encourage foreign participation in the sector, sources added. The civil aviation ministry has recently raised the FDI limit in the cargo segment to 74 percent from 49 percent while a move is under way to allow foreign airlines to pick up minority stakes in dedicated cargo operators.

Further, 100 percent FDI is allowed in the construction of greenfield airports. The policy on cargo airports would ensure that adequate incentives are provided to attract both domestic and foreign investment, the sources said.

Under the new policy on cargo, a Centre for Perishable Cargo will be established, which would try to expedite movement of cargo at the airports. The civil aviation ministry also plans to set up cold storage chains at major airports. Separate facilities will be developed at airports to handle perishable goods, durables and non-perishable commodities such as textiles.

An automated data clearance system would be developed to speed up movement of air cargo. At present, air cargo within India is carried primarily by Jet Airways, Indian and express delivery firms DHL and Blue Dart Express. Low-cost airlines such as Air Deccan, GoAir and SpiceJet are also bullish on air cargo services. The carriers expect package and document shipments to make up 10 percent of their revenues in the first full year of operations. The air cargo in India has nearly tripled from 4.9 lakh tonnes in 2000-01 to over 14 lakh tonnes in 2004-05.

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