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Prospect of Commercial Vehicle Sector Gaining Any Momentum Bleak Until Government Pays Attention to Demands of Truckers?

Updated on September 11, 2019
Ajay Vikram Singh profile image

Ajay is an ex-cricketer, a trucker and a paranormal investigator at Indian Paranormal Team.

Slowdown in demand for heavy duty trucks

 
August 2018
August 2019
% Change Y-o-Y
Ashok Leyland
11,135
3,336
-70%
Tata Motors
12,715
5,340
-58%
Mahindra
1,148
354
-69%
VECV
6,069
3,538
-41.7%
Total
31,067
12,568
-59.5%
The demand for commercial vehicle has gone down by 59.5% in August 2019 as compared to August 2018.

Back in August, AITWA (All India Truckers Welfare Association) came up with a campaign called ‘No Truck Purchase’. Now the AIMTC (All India Motor Transport Congress) have joined the campaign along with its regional bodies. While AITWA along with their associates announced that they won’t buy new trucks for the next three months, AIMTC has gone a step ahead and announced that they will not buy a single truck as long as their demands are not fulfilled. The regional bodies like Bombay Goods Transport Association, Karnataka Goods Transport Association, Maharashtra Truck Owners Association, and some big transport companies like BLR Logistics, Shriniwasa Roadlines, OM Logistics, etc. have decided to join the campaign at full thrust.

So what are the demands of these truckers? Let’s have a look.

  • Presumptive income: Last year the government of India made some changes to section 44/E according to which all the small fleet operators with less than 10 trucks don't need to maintain their accounts. Instead, the government will assume their income at 1000 INR per ton of gross vehicle weight. Now according to this law, an operator who owns 5 trucks with a gross vehicle weight of 28000KGs earns 28000 INR per month/per truck. The government assumes his annual income as 28000*12*5, which is 16, 80,000 INR. Unfortunately, the ground reality is different. A lot of small fleet operators have grounded their fleets and those who are still daring enough to keep them on roads, are running in debts. The freight rates are plummeting day by day on all the routes due to low demand. In order to understand the bigger picture, let’s take an example. Anand Mishra who had his 10 wheelers running between Kanpur and Indore did not renew his national permit in February this year. The freight rates on the same routes have gone down so much that his profit went down from 15,000 INR per trip to 2000 INR per trip. Also, the number of trips which he made till 2018 were 4 per month but due to low demand, the trips got reduced to two and sometimes even 1. Forget about EMIs that's not enough to pay the salaries of drivers and cleaners. According to Anand, he has grounded his fleet and has not just defaulted on EMIs, he failed to pay the road tax of a truck either. The condition is same for every trucker, everywhere in India and under such circumstances; you cannot expect them to buy new trucks. The transport associations are demanding to reduce the amount that the government has assumed the truckers are earning, simply because it’s unrealistic.
  • Exemption of GST on third party premium on transport vehicles: In times when the truckers are forced to ground their fleet, the government is increasing the GST on third party premium year by year. The associations are demanding the government to reduce this GST so they can have some relief.
  • Revocation of 2% TDS imposed on withdrawal of money over 1 crore: The trucking sector was already fuming with government’s policies and they bought in another during the 2019 budget. The sector is heavily dependent upon cash because they have to pay for loading/unloading charges, tolls, and diesel in cash. Some people might argue over going digital but currently, that is not an option. Most of the toll plazas are still not well equipped with proper electronic transaction methods. For fuel, a lot of fuel stations don’t accept cards or payments through digital wallets on highways. Also, the truckers are a bit hesitant about using these methods on the highway because there are many cases when a driver used his card for payment and the payment was declined and he had to pay cash but the amount was deducted from the bank later. The officers on highways don’t accept bribes on Paytm either. As long as these technologies are not free of chunks, truckers on the highways have no option but to use cash and this way, even the smallest of transporters reach the threshold of 1 crore in no time so a TDS of 2 lacks for the withdrawal of cash is nothing but cruelty.
  • Reduction of GST on the purchase of new vehicles: Trucks are listed among ‘sin goods’ in India. They attract a GST rate of 28%. Not just trucks, tires and spare parts of trucks are listed under 28% slab. According to the government, they are ‘luxury goods’ and the trucking associations want this to be shifted to lower categories.

The above 4 points are not the only problems in the trucking sector. There is a famous proverb “If you want revenge on someone, brainwash him with the idea of buying a truck” among trucking fraternity. There’s a massive shortage of truck drivers in India. Those who are driving want their kids to join any other profession but not trucking. The truck drivers carry around 70% of total freight in India and hence they are the backbone of the Indian economy but unfortunately they are the least respected individuals in the society. A driver getting beaten and harassed by an officer on the highway is a very common sight. On average a truck driver won’t make 20,000 INR a month but to earn that, he has to go through hell. Some drivers who work on per trip basis won’t even earn 10,000 INR a month these days. All these officers are constantly looking for bribes on the highways and when a driver tries to retaliate, he gets beaten. Several sections in the law are misused by the authorities to extract bribes and the driver has no way to prove that he was innocent. The new motor vehicle act is going to be another nightmare for truckers and in the future, that is going to drive more people out of this sector.

Right now it looks like the trucking unions have left behind the past methods of strikes and are implementing new a method to have their voices heard. It was July 2018 when AIMTC went on strike over these demands but after wasting 8 days, all they got from the government was promises. The new method, however, is going to be disastrous for the government because 15% of GST that the government receives is from the automobile sector. The truck manufacturers are already struggling and according to the experts, commercial vehicle sales have struck the lowest point in the past 20 years. All the leading truck manufacturers like Tata Motors and Ashok Leyland have dropped the prices of their trucks by as much as 8 lacks but still, the numbers are going down, at a rapid pace. The sales of heavy goods vehicles have dropped by 60% in August 2019 against August 2018 as only 12,568 units were sold in the month.

Ashok Leyland has announced 59 non-working days across 5 plants. Since now AIMTC has joined the campaign to not buy new trucks, the numbers are going to plummet further. It will be interesting to see whether the government is interested in taking the demands of truckers seriously or not in the coming days.

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