Indian IATA agents form the backbone of the air cargo ecosystem, serving as the bridge between airlines, airports, customs, exporters, and importers. They enable seamless global trade by providing booking, documentation, customs clearance, payments, and end-to-end logistics solutions.
Indian IATA agents act as a link between supply and demand. Numbering 1,000 across India, most of these agents are SMEs. Agents provide crucial logistics solutions, from booking and scheduling to customs clearance and door-to-door deliveries, for thousands of Indian businesses. We also serve as financial intermediaries, managing cargo payments, airport handling fees, and customs duties. By acting as interface with airlines, airports, and customs, we enable Indian exporters and importers — a majority of whom are MSMEs — to access global markets. The Air Cargo Agents Association of India (ACAAI) has been representing the IATA agents in India since 1970.
Burden of bank guarantees
The IATA agents are subject to IATA’s financial protocols, including annual reviews and bank guarantees, whenever necessary. Many airlines now demand separate bank guarantees simply for holding air waybills and securing cargo space. This practice places a financial burden on IATA agents, especially the 80 per cent who are SMEs. It is an arbitrary and avoidable cost that is passed on to the consumers, making Indian goods less competitive globally. This is unjust given that India is one of the world’s creditworthy cargo markets, with a recovery rate of 99 per cent.
GST’s impact on air cargo
The GST reforms for air cargo harm working capital. Unlike ocean freight, which has a 5 per cent GST, air cargo is subject to an 18 per cent GST. While this is a zero-rated, revenue-neutral tax on paper, it creates an ‘inverted duty structure’. Our profit margins are far less than the 18 per cent GST rate.
This creates a cash flow mismatch. Airlines bill us for freight with GST, requiring payment within 30–45 days, while we often receive payment from shippers in 60 days or later than that. This billing and collection delay, combined with a monthly GST outflow, strains our finances. Agents are unable to offset their GST credits and face year-long delays in receiving manual refunds, which chokes their working capital. These two policies have dampened the growth and survival of Indian IATA agents. The added costs from interest on bank guarantees and blocked working capital from GST refunds force many established players to exit the trade. The industry’s well-being is vital for India’s economic development and national security.
