Indian air cargo soars with ‘China plus one’ strategy

The Indian air cargo sector has witnessed substantial growth and transformation over the past decade. According to the Directorate General of Civil Aviation (DGCA), domestic cargo traffic registered a compound annual growth rate (CAGR) of 4.0% from 2013-14 to 2023-24, while international cargo traffic grew at a CAGR of 2.5% during the same period. Despite this progress, Indian carriers hold only a 13.4% market share, while foreign carriers dominate with 86.6%. According to the Airports Authority of India (AAI), shipments in and out of Indian airports were up 7% yearly, reaching 3.4 million tonnes in the fiscal year 2023-24. For context, Hong Kong alone handled 4.3 million tonnes of cargo in 2023. Meanwhile, Indian air cargo outperformed overall global air cargo growth in 2024, with international traffic growing at 19% compared to a global average of 13%, according to the India Air Cargo Outlook 2025-2029 report by Trade Data Service of the Trade and Transport Group, published in January 2025. The report also projects that Indian air cargo will grow annually by 6% to 9% for the next five years and handle between 5 and 5.8 million tonnes of annual cargo by the end of 2029. Glyn Hughes, Director General of The International Air Cargo Association (TIACA), attributes this growth to a combination of factors, including substantial expansion of the manufacturing sector and continued success in high-tech, pharmaceuticals, aerospace, automotive, and perishable exports. “India is also expected to be a significant beneficiary of an accelerated China Plus One production strategy, which could result from the promised introduction of further tariffs on Chinese imports by incoming U.S. President Donald Trump,” Hughes explained. The Ministry of Civil Aviation reports that nearly 80% of India's air cargo traffic is transported via belly cargo on passenger flights, with only 20% carried by dedicated cargo airlines from 2013-14 to 2022-23. This heavy reliance on belly cargo underscores the need for more dedicated freighters to improve efficiency, reduce logistics costs, and enhance airport turnaround times. With increasing exports and the "China plus one" strategy gaining traction, both Indian and international airlines are ramping up their cargo operations, according to a report in The Economic Times. Key export sectors such as electronics, pharmaceuticals, and perishables drive demand. DHL projects a 20% annual growth in the industry, highlighting contract logistics and cross-border trade as significant growth areas. Its CEO, Pablo Ciano, noted that India’s finished goods exports are growing at a robust 20% year-over-year. Etihad Airways is expanding its cargo operations, operating five freighters alongside passenger services and exploring joint ventures in India. The airline is also restructuring its cargo operations into four regions, prioritizing India. Indian carriers like IndiGo are also expanding their freight operations. Mark Sutch, Chief Commercial Officer of IndiGo’s CarGo, highlighted the company’s upward momentum, citing a 10% rise in domestic tonnage and a 4% increase in international tonnage, particularly on routes to Istanbul. IndiGo, according to DGCA data, currently operates three Airbus A321 freighters, Blue Dart operates six Boeing 757s and two Boeing 737s, Quikjet has two Boeing 737s, and SpiceJet has three Boeing 737s. Air India does not have dedicated freighters. However, last year's report indicated that the airline plans to introduce them to cater to growing cargo traffic and spin off its cargo segment into a subsidiary to unlock its full potential. However, this has not materialized so far. Upcoming airports, such as Noida International Airport (NIA), Delhi’s second major airport that opens this summer, are also striving to become more cargo-centric. They have appointed Air India SATS (AISATS) to develop a multi-modal cargo hub (MMCH) at the airport, spread across 80 acres of land. "Recognizing the potential of air cargo, we have embarked on developing dedicated freight corridors, implementing digital processes such as airway bills, and investing in state-of-the-art cargo terminals," aviation minister Ram Mohan Naidu said recently. India's air cargo sector is poised for significant expansion, driven by strong government support, increasing exports, and growing demand from key industries. While foreign carriers dominate the market, Indian airlines actively invest in fleet expansion and infrastructure improvements to enhance their competitive edge.

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