In pur­suit of busi­ness

Lack of busi­ness has the trans­port in­dus­try wor­ried.

Commercial Vehicle - - WHAT'S INSIDE - Story by: Anirudh Ra­heja

Lack of busi­ness has the trans­port in­dus­try wor­ried.

Satwinder Singh Sukhala, a small time busi­ness man who re­pairs truck ra­di­a­tor is wor­ried. He is in search of work, and there isn’t much com­ing his way. Un­til last month, that is be­fore the GST rolled out, Sukhala did not get time to look up. There were times when he spent

12 to 14 hours work­ing on ra­di­a­tor jobs at his small shop in Delhi’s big­gest truck­ing hub San­jay Gandhi Trans­port Na­gar, with­out tak­ing a break. There’s been a turn­around. Rather than car­ry­ing out re­pairs, Satwinder has come to spend time in wor­ry­ing about meet­ing his ex­penses. Other than as­sure the peo­ple he deals with of a timely pay­ment, Sukhala has lit­tle else to do. Time he knows is run­ning out. But hav­ing spent so many years of his life re­pair­ing ra­di­a­tors, Sukhala is sud­denly feel­ing like a fish out of wa­ter. The trade has taken a deep dive. Al­most 90 per cent of it is lost. Point­ing out to a line of trucks parked, he states that this is not a nat­u­ral oc­cur­rence. Never did he see trucks stand­ing for more than eight hours at a stretch he men­tions. They can be seen parked at the same place for days to­gether.

Post the GST roll-out, var­i­ous stake­hold­ers of the CV in­dus­try have been find­ing their means of liveli­hood go into a limp mode. Af­fected by de­mon­eti­sa­tion given the cash-in­ten­sive na­ture of the busi­ness, the CV in­dus­try last ex­pe­ri­enced a hike in freight rates in March 2017. Since April 2017, freight rates have been slip­ping. On April 01, 2017, the coun­try mi­grated to BSIV emis­sion norms. It proved to be a dis­rup­tion. Sales shrunk. Busi­ness was al­ready slow­ing

down at the tyre shops, spares re­tail­ers, body builders, and dhabas. GST seems to have caused them slow down some more. In­sisted Sukhdev Singh (name changed on re­quest) that the cargo move­ment has gone south by al­most 60 per cent. Fleets are not rolling the way they once did. Find­ing new load is prov­ing stren­u­ous. One gets a feel­ing that un­cer­tainty has set in. The en­tire chain seems to have come to a halt. Malkit Singh, a trans­porter in San­jay Gandhi Trans­port Na­gar said that there has been a se­vere set back. “I don’t even get half the trips out of the eight to 10 trips of truck­load I used to get un­til two months ago on the Del­hiBan­ga­lore route,” men­tioned Singh. An­other trans­porter Ritesh Prasad averred, “I used to have six to seven or­ders ev­ery month for Mum­bai. Half the month has al­ready passed, and my third bill is wait­ing to take off.”

Used to car­ry­ing out trans­ac­tions with­out proper pa­per­work, the trans­port in­dus­try is find­ing it tough to crack the GST. Used to cash trans­ac­tions with not much record keep­ing, spare parts re­tail­ers and shops sell­ing lubes are see­ing their busi­ness dwin­dle. The drop is said to be so dras­tic, that a six months time­line looks overtly op­ti­mistic. Ac­cord­ing to a re­port by the In­dian Foun­da­tion of Trans­port Re­search and Train­ing (IFTRT), al­most two and a half mil­lion trucks are in­volved in cargo move­ment and just ten per cent of them com­ply with the car­riage by road act. There have been very few tak­ers for new or­ders what with the ex­e­cu­tion of older or­ders dif­fi­cult. Many still don’t com­ply with GST norms, which is looked upon as a mech­a­nism that in­cludes vig­or­ous tax checks across all lev­els. Trans­porters seem ex­tremely wary about the new regime. They are very cau­tious, and have been push­ing the traders for GST num­bers. They are not will­ing to en­gage with them in case they do not fur­nish the GST de­tails.

Ac­cord­ing to an in­dus­try source, the num­ber of trucks en­ter­ing Delhi, or pass­ing through the cap­i­tal city, has gone down by more than 50 per cent. He rea­soned that com­pa­nies are in a wait and watch mode be­cause of the huge un­cer­tainty that pre­vails. They are look­ing for a cleaner air, he said. Since 90 per cent of the trans­port in­dus­try falls un­der the un­or­gaised do­main, it is look­ing dif­fi­cult for them to sus­tain. The high costs as­so­ci­ated with ful­fill­ing the re­quire­ments of GST will sim­ply make it un­sus­tain­able. About 25 kms from San­jay Gandhi Trans­port Na­gar, over 5000 trucks are said to have come to halt in Farid­abad. A ma­jor drop in sup­ply or­ders is said to be rea­son. The gen­eral sec­re­tary of All Farid­abad Trans­porters As­so­ci­a­tion, Sub­hash Kaushik, is known to say that a ma­jor­ity of trucks are parked in the Trans­port Na­gar, and other places due to lack of or­ders.

Driv­ers are happy

With many trucks parked for days on end, driv­ers are a happy lot. A reg­u­lar on the Delhi-Kash­mir route, Mukesh Pratap is happy be­cause it takes him four days to reach Kash­mir. He used to take five days ear­lier, even six. The dis­ap­pear­ance of VAT re­lated check posts has en­sured time sav­ing. We no longer have to wait to pay inter-state taxes, men­tioned Pratap. With the in­stances of reg­u­lar stop­pages and checks at the city en­try and ex­its points hav­ing gone

down, truck driv­ers are find­ing it eas­ier to ply. They now spend more time on the road than off it The time taken to reach the des­ti­na­tion has gone down, stated Ma­hadev Ghori, who shut­tles be­tween Delhi and Jaipur. Opined an ex­pert, that the gains may be short-lived. Once more and more trucks hit the road, the den­sity of traf­fic will in­crease. The time taken to reach the des­ti­na­tion will go up. Over a cup of tea at the San­jay Gandhi Trans­port Na­gar, a driver ex­pressed that checks are still con­tin­u­ing. Two other driv­ers said that ar­bi­trary charges are still be­ing levied. It is not as seam­less as one would think of there­fore, he men­tioned. With over 50 per cent drop in fleet util­i­sa­tion, parked trucks have be­gun to cre­ate a bot­tle­neck. Trans­porters point at sup­pli­ers and ex­press that they have stopped plac­ing or­ders to avoid any prob­lem dur­ing or af­ter trans­porta­tion. They fear that the busi­ness should not plunge be­low 20-25 per cent. We are al­ready strug­gling to re­cover from the im­pact of de­mon­eti­sa­tion, and this de­vel­op­ment has hit us once again, said a trans­porter on the con­di­tion of not dis­clos­ing his name.

Look­ing at a buoy­ant fu­ture

If the ground re­al­ity at the San­jay Gandhi Trans­port Na­gar, and at Farid­abad re­flects a pic­ture where busi­ness has been im­pacted by GST, union road trans­port min­is­ter Nitin Gad­kari is claimed to have said that GST will cur­tail 14 per cent of the lo­gis­tics costs the coun­try in­curs. Claimed an in­dus­try source, that trans­parency will in­crease, and bring down the costs in­curred by lo­gis­tics com­pa­nies by over 20 per cent. An­a­lysts at ICRA fore­cast that GST will im­prove the flow of goods due to the dis­ap­pear­ance of mul­ti­ple tax li­a­bil­i­ties. They are of the opin­ion that the turn­around time will dras­ti­cally im­prove. Truck­ers will no longer have to stop at bor­ders, and to pay tax at var­i­ous lev­els. With hubs de­ter­mined on lo­gis­ti­cal con­sid­er­a­tions rather than state bound­aries ac­cord­ing to Prof. G Raghu­ram, Di­rec­tor, IIM-Bangalore, the hub and spoke model of trans­porta­tion is ex­pected to turn sharper. If this points at a buoy­ant fu­ture, the shift to­wards higher ton­nage trucks and the need to main­tain records is ex­pected to in­flu­ence a mar­ket shift to larger fleets. It is the large fleet op­er­a­tors who will make a large chunk of the or­gan­ised sec­tor. Or­gan­ised play­ers will help their cus­tomers get in­put tax credit. This will lead to smooth flow of goods al­beit in the form of big­ger trucks.

The e-way bill

Start­ing Oc­to­ber 2017, goods that cost more than Rs.50,000 will have to be pre-booked un­der GST, and an e-way bill will have to be raised. The e-way bill is aimed at seam­less move­ment of goods be­tween two des­ti­na­tions. The e-way bill will be sup­ported by an in­fra­struc­ture that in­volves tax of­fi­cials who will ver­ify with hand held de­vices. Cur­rently un­der de­vel­op­ment at the Na­tional In­for­mat­ics Cen­tre (NIC), the e-way bills will be valid up to 20 days depend­ing upon the dis­tance to be trav­eled. This would most likely be one day for 100 km, three days for up to 300 km, five days for up to 500 km, and ten days for up to 1000 km. The cen­tral gov­ern­ment has al­ready re­laxed the time-lime to 20 days (from the ear­lier 15 days) for a travel of over 1000 km. Even though var­i­ous states like Andhra Pradesh, Bi­har and West Ben­gal al­ready have e-way bill in place, na­tion wide im­ple­men­ta­tion will call for a frame work of rules. In­dus­try stake­hold­ers are of the opin­ion that it will take six months for sen­ti­ments to im­prove. For the busi­ness to get back to nor­mal, they are di­vided in their opin­ion on how long it will take.

ØCargo move­ment has gone south by al­most 60 per cent.

⇧ With traf­fic den­sity ex­pected to in­crease, driv­ers may not have a rea­son to be happy for long.

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