India-US Trade Tariff Negotiations: Implications for Air Cargo

 In 2022, India’s non-agricultural exports to the US totaled an impressive US$81.16 billion, with airfreight playing a pivotal role in ensuring the swift and efficient movement of goods. However, recent shifts in tariff structures and regulatory frameworks present fresh challenges, potentially affecting trade volumes, logistical strategies, and operational efficiencies.

Recent modifications in tariff rates on key export commodities have introduced volatility in freight movement, prompting air cargo operators to reassess their logistical frameworks. In 2023, the Most-Favored Nation (MFN) tariff on India’s non-agricultural products averaged 13.5 percent, highlighting the complexities of India’s trade obligations under the World Trade Organization (WTO). Industries such as electronics, machinery, and textiles—integral to India’s export economy—are experiencing fluctuations in cargo volume as exporters seek more cost-effective shipping solutions. Tariff hikes on high-value goods like mechanical and electronic equipment necessitate strategic adjustments in freight allocation, potentially increasing the demand for alternative routes and intermodal transportation to mitigate rising costs. 

One of the primary challenges facing India’s air cargo industry amid the ongoing trade discussions is the efficiency of customs clearance. While reforms such as faceless assessment and single-window clearance have enhanced procedural transparency, heightened scrutiny over tariff classifications and duty structures has led to extended processing times for specific shipments. This is particularly critical for industries reliant on rapid transit, such as pharmaceuticals and perishables. To sustain India’s trade competitiveness, industry experts advocate for the continued modernization of customs procedures. Automating tariff assessments and adopting risk-based inspections can expedite clearance times, while investments in digital infrastructure at major air cargo hubs—including Delhi, Mumbai, and Bengaluru—are vital to overcoming operational bottlenecks and ensuring seamless cargo movement.

Despite prevailing trade uncertainties, air cargo remains a key enabler of India-US trade, particularly in high-value and time-sensitive categories. With US-bound shipments accounting for approximately 38 percent of India’s total non-agricultural airfreight exports, there is an increasing emphasis on government-driven policy initiatives to safeguard trade continuity amid changing tariff structures. Enhancing cargo infrastructure through dedicated freighter capacity expansion and multimodal connectivity between air and sea freight networks is being prioritized. Additionally, discussions around tariff mitigation strategies—including preferential trade agreements (PTAs) and revised duty structures—are underway to alleviate financial pressures on exporters. Adopting cutting-edge logistics solutions, such as AI-powered customs classification systems and blockchain-enabled trade documentation, is expected to bolster transparency, streamline administrative processes, and improve overall supply chain resilience.

As trade negotiations between India and the US progress, the air cargo sector must remain agile and responsive to regulatory developments. Strengthening trade facilitation measures, refining customs efficiency, and fostering collaboration among logistics providers, exporters, and regulatory authorities will be instrumental in mitigating the impact of fluctuating tariffs. The Indian government’s Mission 2030—targeting an expansion of air cargo handling capacity to 10 million metric tonnes—demonstrates a forward-looking approach to industry growth.

 However, realizing this ambitious vision requires a multidimensional strategy that includes regulatory synchronization, technological integration, and substantial infrastructure investments to drive sustainable progress in India’s air cargo ecosystem.