27 Jul 2017
GST impact: Over 25% of trucks idle amid drop in interstate movement
Interstate retail freight rates are down 40-50%, the sharpest decline in over three decades, said SP Singh, senior fellow at the IFTRT.
MUMBAI: More than a fourth of India’s 6 million-strong truck pool is said to be idle after the goods and services tax (GST) came into force on July 1 amid a drop in interstate movement of untaxed and underreported cargo, leading to a fall in retail freight charges.
That’s having a knock-on effect on the transport and truck-making businesses, at least in the short term, experts said.
Interstate retail freight rates are down 40-50%, the sharpest decline in over three decades, said SP Singh, senior fellow at the Indian Foundation of Transport Research and Training (IFTRT).
Such steep declines in freight rates were seen in 1984, 1988, 2008 and just after the 2016 demonetisation, say transporters.
To be sure, transport operators are reporting logistic efficiency gains as those trucksthat are running are reaching destinations quicker with border check posts having been scrapped.
India’s 6 million trucks range from 5 tonnes to 49 tonnes. Out of the total, 1.3 million have national permits and 1.2 million have permits for their home state and neighbouring states, with 40-45% of them not running currently.
Out of the remaining 3.5 million trucks that have permits for their home states, a fourth are idle, added Singh However, in the long run, the increased economic activity that’s expected to result from GST, will mean greater demand for trucks, raising the prospect of a big boost for the commercial vehicle market.