Government plans 74-per cent FDI cap for air cargo business

Mumbai: The government proposes to raise foreign direct investment limit in air cargo business to 74 per cent as part of efforts to further open up the sector, civil aviation minister Praful Patel said.

"The FDI in the air 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 said while flagging off Air India`s first dedicated freighter aircraft to Europe.

The minister said that lack of infrastructure facilities is a key constraint for aviation sector. According to him, India needs at least 500 cargo planes in the next 10-15 years especially when UPS and Fedex only together own 700-800 cargo planes.

The upsurge in import-export demand combined with the open-sky policy and globalisation are factors behind Air-India's decision to ramp up its cargo operations, Patel said.

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.

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.