Two major transport industry bodies have lashed out at the government saying the current policies are hurting the sector and making the business environment unviable.
Stating that high GST rate, ₹2 cess on diesel announced in the Budget, hike in presumptive tax and increase in insurance have hurt transporters severely, the All India Transporters Welfare Association (AITWA) and the All India Motor Transport Congress (AIMTC) said their members have put on hold purchasing of new trucks as the current business environment was unviable and many truckers were staring at loan defaults.
“It is a collective decision of our members as the current situation is not favourable for transport trade. Vehicles are not a profitable business any more,” said AITWA national president Mahendra Arya.
He said starting from August, major transport associations across different cities, including Delhi, Mumbai, Kolkata and Bengaluru, have decided not to purchase any new trucks.
He said due to the high GST of 28%, initial cost had gone up. Many small transporters were bearing the burden directly as they don’t get credit on it.
Loan defaults
Expressing similar views, AIMTC ex-president and chairman of core committee Bal Malkit Singh said, “no one is buying new vehicles. From the past six months many people are not buying at all.”
“Many of our members are defaulting on EMIs. Our member associations across India have asked banks for rescheduling of loans till things improve otherwise there will be a mass default and mass surrender of vehicles,” Mr. Singh cautioned.
Putting the blame on the government for the situation, AITWA questioned the wisdom to club trucks in the 28% GST slab with ‘sin goods’ like cigarettes, paan masala, aerated water and luxury cars.
“Where does a truck fit into this definition?” AITWA asked, adding that “for a truck owner GST is a cost and not an adjustment of credit or debit“.
It further said Finance Minister Nirmala Sitharaman’s maiden Budget “brought two disastrous decisions” — ₹2 cess on diesel and 2% TDS on cash withdrawal of over ₹1 crore per annum.
AITWA said diesel accounts for 60% of the total cost of transportation and “it is not a rocket science to understand how such an increase will affect overall transport cost”.
“This was a permanent increase unlike the daily fluctuation in tandem with international crude prices,” it added.
Mr. Singh of AIMTC also said the TDS on cash withdrawal is a further additional burden to the transporters as the sector heavily cash dependant. Driver and crew members require cash to meet all their expenses on the highway besides other expenditures, he said.
AITWA also said the presumptive tax which was introduced to help out small transporters have now started hurting them due to changes in the methodology of calculations, as a result of which presumptive amount of income has increased substantially than the actual income.
AITWA claims membership of top 500 transport companies in the business of bookings and logistics, while AIMTC said it has membership of around 90 lakh small road transporters across India with affiliation of 3,500 associations.
