Whalesbook
India's air freight sector is seeing significant expansion, with international freight traffic growing by 4.8% and domestic by 5.9% between April and September in FY26. This surge is primarily fueled by premium global shipments, with pharmaceuticals and smartphones leading the charge. Exporters are opting for air cargo, prioritizing speed and reliability over cost, a response to unpredictable tariffs and trade barriers creating global trade uncertainties.
Trade Patterns Shift
The World Bank has forecasted a slowdown in global growth for 2025, citing heightened trade tensions. While demand on North America-Asia routes has softened due to new US tariff policies and the end of de minimis exemptions, air cargo flow within Asia and between Asia and Europe, Africa, and the Middle East is experiencing a boom. IATA's director general, Willie Walsh, noted that the air cargo industry is adapting well to these evolving global trade dynamics.
Speed Over Costs: Pharma Exports
The pharmaceutical sector is a major driver, relying heavily on air freight for vaccines, injectables, and temperature-controlled specialty formulations. While sea freight is still used for bulk drug raw materials, critical consignments like injectables used in life-saving treatments are now predominantly shipped by air. Namit Joshi, chairman of Pharmexcil, highlighted that air freight became a necessity during the pandemic due to container shortages and soaring sea freight rates. Today, exporters prefer air for high-value, low-volume items like formulations and biologics, which can reach destinations like Europe or the US in 48-72 hours, a stark contrast to the 50-60 days by sea. Risks associated with sea routes, such as humidity and potential damage from power outages, further push high-value pharma goods towards air. Pharma exports from April-August 2025 increased by 7.3% to $12.76 billion, with formulations and biologics showing strong growth. Geopolitical issues like Red Sea attacks have also increased sea transit times, adding to air cargo's appeal.
Smartphones and Electronics Lead Growth
Electronics, particularly smartphones, represent the second major growth engine. India's electronics exports grew by 41.9% year-on-year to $22.2 billion in April-September 2025, with smartphone exports alone jumping 58% to $13.38 billion. Companies like Apple, which now sources most iPhones destined for the US from India, are using air shipments to ensure timely delivery, despite higher costs, because of the drastically reduced lead time (3-4 days vs. a month by sea). Dixon Technologies MD, Atul B Lall, believes this momentum in mobile exports can extend to other IT products, televisions, appliances, laptops, and components, especially with ongoing free trade negotiations.
Other High-Value Goods
Besides pharmaceuticals and electronics, other high-value items like gems, jewellery, precious metals, perishables (flowers, seafood, fruits), luxury goods, specialised machinery, and automotive components are increasingly opting for rapid and secure air transport.
Impact
This trend signifies a structural shift in India's export strategy, emphasizing value and speed. It is expected to boost the performance of logistics companies, airlines, and manufacturing hubs focused on high-value goods. The growth in air cargo also contributes to India's overall trade balance and economic growth, potentially leading to increased investor confidence in related sectors.
Rating: 8/10
Difficult Terms Explained
- Premium shipments: High-value, time-sensitive, or specialized cargo that commands higher freight rates due to its nature (e.g., temperature-controlled pharmaceuticals, electronics).
- Tariffs: Taxes imposed by a government on imported or exported goods.
- Trade barriers: Restrictions or policies that limit international trade, such as tariffs, quotas, or complex regulations.
- De minimis exemptions: Rules that exempt low-value shipments from customs duties and taxes. Their removal can increase costs and complexity for certain trade routes.
- Bulk drugs: The raw, active ingredients used to manufacture finished pharmaceutical products (like tablets or capsules).
- Formulations: Finished pharmaceutical products ready for patient use, such as tablets, capsules, injections, or syrups.
- Biologics: Medicines derived from biological sources, often complex and requiring specialized handling.
- Lead time: The time elapsed between the initiation of a process (like placing an order) and its completion (delivery of goods).
- Free trade negotiations: Discussions between countries aiming to reduce or eliminate trade barriers and promote commerce.
- Perishables: Goods that are prone to spoilage or decay and require rapid transportation and often special handling (e.g., fresh produce, seafood, flowers).