Air Cargo Woes Could Shatter India’s Smartphone Export Dreams

On November 23, the Indian Cellular and Electronics Association (ICEA) raised concerns with the government about infrastructure challenges at the country’s airports, highlighting the need to expand airport capacity and improve cargo turnaround times.

“We often face situations where there’s simply no space to unload cargo, which adds unnecessary delays to the shipment. Then there is the inspection and customs clearance process that further extends the time. It is a system that needs efficiency at every step,” Rajesh Sharma, principal advisor to the ICEA, told The Core.

India’s smartphone exports, valued at $10 billion in FY2022-23, have climbed rapidly thanks to factors like the production-linked (PLI) schemes, government initiatives like Make in India, and companies shifting bases from China to India.

But surrounding infrastructure and logistical capabilities needed to send these phones to their destinations haven’t kept pace with this growth. Logistical bottlenecks threatened to hinder further growth for smartphone companies like Foxconn, Pegatron, Tata Electronics and Samsung who all manufacture and export from India.

Major exporting hubs like Delhi, Bengaluru and Chennai are struggling with limited cargo infrastructure. The lack of dedicated freighters, aircraft that are designed to just carry cargo, exacerbates these issues, as most electronics shipments depend on the belly space of passenger aircraft.

In comparison, countries like China rely on well-established freighter networks, enabling them to dominate global smartphone exports. According to Business Standard, Chinese mobile phone exports slipped from $136.3 billion in FY23 to $132.5 billion in FY24, a 2.8% decline representing a $3.8 billion reduction. This dip underscores shifting dynamics in the smartphone supply chain and competitive pressures from emerging players​.

With India projected to achieve $14 billion in smartphone exports next year, experts said that investment in cargo infrastructure is vital to sustain this momentum. The government’s focus on airport expansion and logistical enhancements will be a key determinant of whether India can continue to close the gap with China in electronics exports.

Can Dedicated Freighters Help?

Sharma said that their next step, after approaching the government, was to speak with the airlines that carry cargo in and out of India to increase the capacity and ensure dedicated freighters for Indian cargo.

Sharma believes that a major bottleneck that needs addressing is India’s limited cargo movement capacity.

“Our airlines do not have dedicated freighters — everything moves in the belly of passenger aircraft. While companies like DHL and FedEx offer freighter services, they only operate once a week and rely on consolidation. The bigger issue is that we don’t have a fully organised freighter network within the country, which is something we need to improve,” Sharma said.

India's freighter fleet has grown significantly, tripling to 18 in the past six years, with Boeing forecasting further procurement to support domestic e-commerce and export growth. However, Arun Kumar, president of the Association of Multimodal Transport Operators of India said challenges in making dedicated freighters viable still existed.

“Let’s say, a 747-400 freighter has a 100-metric-tonnes capacity, but airlines need to ensure it is fully loaded both ways to make it viable. The challenge lies in securing both inbound and outbound cargo. If either leg lacks sufficient load, the freighter becomes unfeasible. Additionally, regulatory and security issues can prevent this capacity from being utilised,” Kumar said.

To have dedicated freighters for Indian cargo, India needs enough export volume to justify them only then any airline will be willing to have a freighter fleet from India.

“Instead of dedicated freighters, we should focus on facilitating transshipment hubs. Once we can handle transshipment cargo, it will fill up the bellies of passenger planes, which will make a significant difference,” Kumar said.

Airports And Scaling Challenges

When it comes to smartphone and electronics exports, Delhi, Chennai, and Bengaluru airports serve as the primary hubs. Foxconn, a major Taiwanese electronics manufacturer producing Apple devices in southern India is a leading exporter alongside Samsung.

These companies are driving India's smartphone export surge. India's electronics manufacturing sector has experienced rapid growth under the PLI scheme, transitioning from being a net importer to a net exporter of mobile phones.

Domestic production surged from 5.8 crore units in 2014-15 to 33 crore units in 2023-24, significantly reducing imports. Exports reached 5 crore units, while foreign direct investment (FDI) surged by 254%, underscoring the scheme's success in boosting both manufacturing output and investment.

“I think Kempegowda International Airport, Chennai International Airport and possibly Rajiv Gandhi International Airport will be key players here. With Foxconn ramping up investments for the latest phone models, Chennai and Bangalore especially need a close look. The focus should be on what kind of infrastructure will be essential in the next three years as smartphone exports push toward the $50 billion mark,” Ajay Sahai, director general and CEO of the Federation of Indian Export Organisations (FIEO) told The Core.

The Indira Gandhi International Airport handles significant cargo for Samsung and shipments from Dhaka. The upcoming Jewar Airport in Uttar Pradesh, anticipated in 2025, could alleviate Delhi's congestion, especially as the electronics manufacturing sector expands.

“The Noida PLI scheme has attracted numerous companies, including Samsung, for mobile and display production. Chennai International Airport plays a key role with its Apple plant but is facing capacity challenges, leading Kempegowda International Airport to emerge as South India's logistics hub,” Ruby Abidi, director of Air Cargo at cargo-partner told The Core.

Kempegowda International Airport, in particular, is poised to expand its cargo facilities to meet growing demands, utilising available land for development.

“Apart from the Kempegowda International Airport, the upcoming Dholera airport, set to open next year, will bolster semiconductor industry logistics alongside Ahmedabad’s international airport. Meanwhile, Rajiv Gandhi International Airport is emerging as a key electronics hub, with its airport well-positioned to support industry growth despite less pressure than others,” Sharma explained.

As the government targets a leap from goods worth $115 billion to $500 billion in electronics manufacturing, everything from capacity to timing needs to be multiplied by four.

Not just smartphones but even general cargo being exported from India has been facing delays due to a number of factors. Kumar believes that we are not utilising our existing facilities to the fullest.

“If an airport has a capacity of 1,000 metric tonnes but only uses 400 due to various constraints, the efficiency is low. Many airports operate for just 8 or 9 hours of the day, and when I say less than 50% utilisation, that’s optimistic. Terminals are designed for movement, not storage, but delays cause extended dwell times, further straining infrastructure,” Kumar said.

Need For Infrastructure

India's smartphone manufacturing boom—producing over 300 million devices annually—has thrust logistics into the spotlight. The sheer volume of imports and exports has made goods a critical challenge. As smartphone exports climb, the pressure on logistics and infrastructure grows exponentially.

“At the airport, the time taken for logistics and exports is still quite high, and that includes everything from storing goods at the airport to the warehousing capacity, which is currently challenged,” Sharma said.

India's logistics sector still lags behind global standards. In comparison to China, which dominates global smartphone exports with $139 billion annually, India takes nearly double the time to turn around shipments.

“Delays occur when shipments are tendered to the airport due to customs involvement and security checks. Every unit must be scanned right before the shipment is exported, causing significant delays in processing. This discourages carriers from committing resources to India, and flying aircraft with empty cargo holds is extremely costly,” Kumar said.

Customs clearance is a notorious bottleneck. In China, integrated customs systems allow for pre-clearing shipments before they reach airports. Implementing similar practices in India, such as factory-level pre-packing, could drastically cut clearance times.

“The point is, if we are assuming a massive surge in smartphone exports from Chennai, we need to assess whether the infrastructure is up to the task. Do we have sufficient clearance facilities, enough scanners and x-ray systems, and a round-the-clock team of customs officers? Every aspect needs to be carefully evaluated to handle the scale of operations effectively,” Sahai said.

Kumar on the other hand has a different approach. He believes that we have sufficient airport infrastructure, especially at Kempegowda International Airport, a greenfield airport that has fewer limitations. Chennai International Airport, however, has capacity constraints due to being a brownfield airport.

A greenfield airport is constructed on entirely new, undeveloped land where the site has no prior infrastructure or aviation facilities while a brownfield airport is developed on an existing site like an older airport or repurposed facility.

“While we can build more infrastructure, it’s crucial to optimise what we have. If airports like Bangalore aren't operating at 80-90% capacity, the costs of underused infrastructure are wasted, ultimately leading to higher export costs. We should focus on better utilising existing facilities rather than investing in underutilised, capital-intensive infrastructure, as the burden of inefficiency ultimately falls on the customer,” Kumar added.

India’s airports face additional challenges. While major hubs like Kempegowda International Airport and Chennai International Airport are being equipped to handle increased cargo volumes, these improvements are incremental.

Experts believe that expanding 24/7 cargo facilities, adding more freighters, and deploying advanced technology like AI for customs inspection could bridge the gap.

“We need to minimise the time between landing and departure by speeding up the customs and clearance process. If it currently takes 24 to 36 hours, we should aim to reduce that to 12 to 18 hours to boost efficiency. We could also explore solutions like pre-packing at the factory, so when it reaches customs, everything is already ready for inspection, streamlining the whole process,” Sharma added.

The pressure to reduce time is particularly acute for high-value shipments of the latest smartphone models.

“When dealing with the latest smartphone models, there is a strict 24-hour deadline to get shipments from the factory to their destination port in the US. With 14 hours spent in flight alone, clearance processes need to be lightning-fast. It is not just customs—airport security and every stakeholder must work together to streamline and reduce clearance times to meet these tight deadlines,” Sahai added.