19 Mar 2019

Call to fix minimum-guarantee freight rate for truck sector


With lorry owners struggling to meet their ends, the government should fix a minimum guarantee freight rate to ensure sustainability in the long run. This request came in unison from the truck owners present at the grand finale of ‘Lead the Road’..

If the government can fix the minimum fare for buses and railways, why not fix the freight rate for the truck sector, the truck owners asked.

The demand for minimum guarantee freight was first made by SK Mittal, President, All India Motor Transport Congress, the parent body that represents the truck industry across the country. It is the duty of the government to fix cost per km, said Mittal during a panel discussion at the meeting.

“We want to give a message through BusinessLine to the government to provide us cost per km so that we can save, and small operators will benefit in the long run. If a client is quoting less than that, then anti-competitive law will be there to penalise,” he said, evoking loud cheers from the audience. Excess vehicles on road and lesser cargo to carry has created a major demand-supply problem. Clients often exploit this situation and pay low freight, which is just enough to break-even. Truckers carry whatever cargo is available to keep their vehicle running and are not worried about the risks involved in the long run, said a truck owner, during a discussion moderated by Shishir Sinha, Senior Deputy Editor, BusinessLine.

Anath Swarup, Joint Secretary, Logistics, a division at the Commerce Ministry, in an interaction after the panel discussion said the truck industry is purely based on supply and demand. Fixing of freight should be left to the industry and not the government. Stakeholders in the industry should come together to fix the cost per km, he said.

Speaking on Goods and Services Tax (GST), Ramesh Agarwal, President, All India Transport Welfare Association, said the organised sector has come under GST, but not the unorganised due to lack of awareness and understanding of the taxation system. “In my calculation, by registering under the GST, a trucker can save nearly 8 per cent of the cost,” he said. The industry is dominated by the unorganised sector with one or two vehicle owners having 80-85 per cent of the vehicles.

Organised players have benefited a lot by way of Input Credit and the eWay bill. The introduction of fuel price under GST will benefit the transporters even further, he added. Shridhar Sharma, General Manager (Retail Sales), Delhi State Office, IndianOil Corporation, said the move to include diesel in GST must be decided by the Centre through the GST Council, in which all State governments are present. State governments earn heavily from fuel through value-added tax, and don’t want to let go However, “I feel, in future, fuel could come under the GST.”

Raghavan Srinivasan, Editor, BusinessLine, in his welcome address, said the event has provided the perfect platform for fleet operators, financiers, fuel suppliers, and the government to discuss various issues related to the transport industry. It all began last June, when the first Transporters Meet was held at Namakkal. This was followed by events at Kochi, Vijayawada, Hyderabad, Pune, Jaipur, Jamshedpur, Gandhidham, Navi Mumbai, and finally, Gurugram.