New Delhi: Two major transport industry bodies, All India Transporters Welfare Association (AITWA) and All India Motor Transport Congress (AIMTC) have lashed out at the government saying the current policies are hurting the sector and making businesses environment unviable.
Stating that high GST rate, Rs 2 cess on diesel announced in Budget, hike in presumptive tax and increase in insurance have hurt transporters severely, the two associations said and added that their members have put on hold purchasing of new trucks as the current business environment is unviable and many truckers are 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 anymore,” AITWA National President Mahendra Arya said.
He said starting from August, major transport associations across different cities, including Delhi, Mumbai, Kolkata, Bengaluru have decided not to purchase any new trucks.
He said due to high GST of 28 per cent, initial cost has gone up and not only that many small transporters are bearing the burden directly as they don’t get credit on it.
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.”
He further said there has been a severe slump in the industry and in the past many months many of the transporters are unable to buy new vehicles because the existing fleets have become unviable.
“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,” Singh cautioned.
Putting the blame on the government for the situation, AITWA questioned the wisdom to club trucks in 28 per cent 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 “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” — Rs 2 cess on diesel and 2 per cent TDS on cash withdrawal of over Rs 1 crore per annum.
AITWA said diesel accounts for 60 per cent 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.
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.