Bal Malkit Singh: ‘India's commercial vehicle industry is currently losing Rs 1,600 crore a day.’

by Nilesh Wadhwa 16 May 2021


Diesel has hit an all-time high in India and costs Rs 90.40 a litre in Mumbai, up by Rs 25.21 a litre in 14.5 months. The Chairman – Core Committee and former president, All India Motor Transport Congress speaks to Autocar Professional.

The price of diesel has crossed Rs 90 a litre in Mumbai and is at an all-time high in India. What do you have to say about the continuing price rise in fuels and particularly diesel which the majority of commercial vehicles use?
The country is facing the unprecedented pandemic, everyone is already facing a huge crisis be it losing their loved ones, depression, stress or having no source of livelihood. In our industry, almost 70% of the trucks are idle, only 30% are operational and that too in the essential delivery segment – oxygen, medical equipment, medicines or FMCG goods. Why is that during the election period fuel prices are not increased, and that once the elections are over diesel and petrol prices start getting increased again? Is the government blind, deaf and dumb? No matter how much we say, they don’t seem to understand.

There are around 20 crore people directly or indirectly involved in the transport or trucking sector. The fuel price hike impacts almost 130 crore people. Diesel as a fuel constitutes almost 65% of our operational cost. It is quite obvious with the increase in fuel prices, our operational cost will go up. On the other hand, there is low capacity utilisation because of the lockdowns in almost the entire country.

Around 70% of trucks are idle. The remaining 30% are active in the essential delivery segment – oxygen, medical equipment, medicines or FMCG goods.

A truck that travels from Delhi to Mumbai, does not get a return load for 2-3 days . . .  this also leads to an increase in operational cost. As a result, CV operator profitability, which was already very low, is now almost diminished. If things continue the way they are, and the government does not take the right steps, it will badly impact the transport sector.

Will the fuel price hike be passed on to your customers?
There is two type of businesses in our industry. One is the contractual business wherein the contact with the customers (corporates, PSUs) in which we have escalation/de-escalation clauses. That revision will be available for a part of the transport segment, which is a marginal increase; they do not get the complete increment. ‘

The second business is in the daily trade, wherein almost 70-75% of the transporters are involved. It is based on demand-supply and here it looks a bit difficult to pass on the diesel price hike to the customers. We will be able to pass on that once demand comes back, but at present, when most of the trucks are idle, it is not possible for us to think about passing the cost.

If the country’s economic situation was better and things were normal, we could have thought about protesting against the hike. This is not the time to protest, but we can only hope that better sense prevails. It is important to understand that the truckers are putting their lives at stake to ensure transportation of essential goods across the country.

What is your view on a national lockdown?
Almost the whole country is in lockdown. Although it is not a national lockdown, almost 95-98 percent of the country is under lockdown – Maharashtra, Gujarat, Rajasthan, Haryana, Delhi, Punjab, Uttar Pradesh, Bihar, Madhya Pradesh, Chattisgarh, West Bengal, Karnataka, Andhra Pradesh, Tamil Nadu. Hardly any state is left. While there is no official ‘National Lockdown’, every state has announced its own lockdown.

What is the estimated loss for the industry?
As per our calculation the cumulative loss from April 1 to May 10, 2021 the loss was around Rs 50,000 crore. At present, the industry’s losses are pegged at Rs 1,600 crore per day. The losses have grown significantly from Rs 500 crore to Rs 1,600 crore as business went down. This will keep increasing in the coming days until things don’t normalise.

Are you expecting any support from the State’s and the Central government?
I think the government should proactively come forward and understand the difficult situation we are in. At present, our biggest concern is the financial commitments, repayment of our loans and EMIs. Given the current scenario, it is difficult for us to manage and pay the EMIs on time, which will result in bad loans.

The government should look at immediate deferment of the loans for reasonable period and, if needed, can be reviewed and extended. On the other hand, the extension of validity of documents is already extended till June.

While the government has suspended tolls for oxygen-carrying vehicles, similar concession needs to be given to the transport sector till things normalise. We also request that truck drivers be recognised as frontline warriors and be covered under Covid insurance. Most of the drivers who are dying because of Covid-19, there is no insurance available for them. We are bearing the cost of the same, which is approximately around Rs 300,000-400,000, and there is no support from the government for the same.

How do you plan to vaccinate the truck driver community in India?
We have urged the government that since the truckers are more vulnerable part of the society, they should be given priority for vaccination at a convenient place like truck nakas, toll plazas or around the checkposts. We are also trying to tie up with corporates and hospitals to see how we can facilitate faster vaccination of the truck driver community.