Bangladeshi cargo is hitting Indian airports, which has become a concern for local businesses in the world’s most populous country, while creating another headwind for India’s already shrinking textile economy as exporters fight for air capacity.
According to a report in Indian newspaper The Hindu Business Line, tonnes of clothing from Bangladesh is being shipped through Delhi’s Indira Gandhi International (IGI) Airport, taking up space on planes bound for Europe and the United States.
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From April to December 2023, IGI handled 260,000 tonnes of air cargo, with Bangladesh accounting for only 5,000 tonnes, or less than 2% of the total air cargo passing through the airport.
However, this percentage increased dramatically in the January-March quarter, with Bangladesh’s share climbing to 9 percent of total air cargo, or 8,000 metric tons.
This has led to traffic jams and an increase in air freight rates by almost 300%, says Israr Ahmed, vice-president of the Federation of Indian Export Organizations (FIEO).
This scenario is the likely outcome of a February 2023 trade deal between South Asian countries, which allows goods exported under Dhaka seal to arrive directly at IGI with minimal border checks. Earlier, these goods were shipped exclusively from Netaji Subhas Chandra Bose International Airport in Kolkata.
And more recently, companies in both countries have shifted more goods from sea to air freight following continued Houthi attacks on ships crossing the Red Sea, forcing container ships to take an extra week or two to circumnavigate the Cape of Southern Africa. Good hope.
Apparel is the lifeblood of Bangladesh’s economy, exposing the country’s manufacturers to higher risks when the Red Sea crisis began and freight rates began to rise. In 2023, Bangladesh exported $47.4 billion worth of clothing in total, accounting for 85.3% of the $55.6 billion worth of goods shipped out of the market, according to the Export Promotion Bureau (EPB). from the country.
On the other hand, India’s textile sector has seen better days, making the combined pressure of goods from Bangladesh and Red Sea ship hijackings even harder to bear.
In the financial year 2023-24, textile exports out of India stood at $34.4 billion, a decline of over $1 billion, or about 3 percent, from the previous financial year. On a two-year basis, the decline is even more pronounced, with exports plummeting 16.3% from 2021-22 levels, when India reported exports worth Rs 41 billion. dollars.
To prioritize Indian air cargo and reduce potential cost pressures on Indian shippers, FIEO is calling on the government to introduce remedial measures, including a “landing tax” on Bangladeshi cargo.
FIEO is not the only association seeking government intervention to help Indian shippers.
In February, India’s clothing exporters’ body, the Apparel Export Promotion Council (AEPC), urged the government to suspend last year’s order that allowed Bangladesh’s exports to pass through the air cargo complex from IGI.
The association argued that the Red Sea crisis has already increased transportation costs for domestic exporters and also forced the continued shift of export shipments from sea freight to air freight.
APEC also believes that allowing exports of Bangladeshi goods through Delhi will only lead to more arrears, with President Sudhir Sekhri telling The Hindu Business Line that 20 to 30 loaded trucks now arrive at the airport every day in from Bangladesh.
Although Indian airports face congestion problems in the short term,
An October report by Bangladeshi newspaper The Business Standard indicated that the country’s air cargo industry was likely to double over the next five years due to increasing capacity development at Hazrat Shahjalal International Airport (HSIA), which is currently expanding.
HSIA can handle up to 900 metric tons of cargo per day, but typically handles between 400 and 500 tons on average.
“If we can change our policy and improve the quality of service, the freight sector will be several times bigger by 2041, compared to the current situation,” said Kabir Ahmed, president of the Bangladesh Freight Forwarders Association (BAFFA), upon publication in October.
He attributed the increase in the number of shippers exporting their goods through India’s Calcutta airport to the poor quality of service within Bangladesh’s wider land operations.
The BAFFA president noted that state-owned airline Biman Bangladesh, which handles more than 8 percent of the country’s total export air cargo, still has room to increase its export share.
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