The government plans to raise the FDI cap in air cargo business to 74 per cent as part of efforts to further open up the sector for foreign investment, Civil Aviation Minister Praful Patel said on Thursday.
“The FDI investment in cargo sector is proposed to be raised to 74 per cent from the present 49 per cent. The FIPB and Commerce Ministry are likely to give their go ahead shortly,” he told reporters here.
Patel, who flagged-off Air India’s first dedicated freighter aircraft to Europe, also said Air India and Indian, the two state-owned carriers that are being merged, plan to ramp up their cargo operations to tap the growing segment.
“The cargo business is very high on the agenda of both Air India and Indian,” he said.
Patel said owing to the upsurge in import-export demand combined with the open-sky policy and globalisation factors, Air India had decided to ramp-up its cargo operations.
Air India has converted two A 310 passenger aircraft into freighters for dedicated cargo operations. It will have 7 flights a week from Mumbai, Bangalore to Dammam and Frankfurt.
The freighter A 310 aircraft will also make four trips in a week via Bangalore and Chennai to Frankfurt and Paris. The weekly cargo capacity is estimated at 474 tonnes.
Highlighting the huge opportunity in the cargo business, Patel said the key constraints of aviation sector was lack of infrastructure facilities.
“When UPS and Fedex own 700-800 cargo planes, we need at least 500 cargo planes in the next 10-15 years,” he said.
Nagpur should be made cargo hub of the country because of its geographical advantages, he said, adding the government would provide all required help to make it a truly world-class cargo hub.