Industry faces potential slump comparable to 1998 Asian crisis as 50% US import tariffs threaten domestic logistics sector.
31 Aug 2025 | 3771 Views | By Angitha Suresh
India's truck rental industry recorded a 3-4% decline in rates during August 2025, marking the second consecutive month of decreasing prices amid concerns over escalating trade tensions with the United States.
The downturn stems primarily from a 50% tariff imposed by the US on Indian imports, which industry analysts ...
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India's truck rental industry recorded a 3-4% decline in rates during August 2025, marking the second consecutive month of decreasing prices amid concerns over escalating trade tensions with the United States.
The downturn stems primarily from a 50% tariff imposed by the US on Indian imports, which industry analysts warn could lead to a prolonged economic slump if not reversed within the next 4-6 weeks.
The rental decline affected major transportation routes across the country. Delhi-Kolkata round trips for 28-tonne trucks dropped from Rs. 2,17,000 to Rs. 2,10,000, while Delhi-Hyderabad routes fell from Rs. 2,35,000 to Rs. 2,25,800. The Delhi-Mumbai corridor, one of India's busiest freight routes, saw rates decrease from Rs. 1,96,000 to Rs. 1,91,000.
Transportation of essential commodities has been particularly affected, with reduced arrivals of vegetables including potatoes, onions, and tomatoes at Agricultural Produce Market Committees in urban centers. Consumer durables and electrical goods, typically stockpiled ahead of the festival season, are also moving at slower rates, contributing to an 8-10% reduction in cargo loads for truckers serving key trade centers.
Heavy monsoon rains have compounded the industry's challenges by disrupting truck movement and damaging highway infrastructure. Flooded roads and traffic congestions have increased turnaround times while raising operational costs due to tire failures and higher fuel consumption per trip.
In response to market volatility, fleet owners are increasingly shifting toward 3-5 year contract models through competitive bidding processes. These agreements offer revenue stability and defined cargo specifications, though at lower profit margins compared to open market operations. The contract model also provides tax benefits, including 40% depreciation allowances during the first half of the fiscal year.
The uncertain market conditions have virtually halted fleet expansion and limited new entrants to the industry. Original Equipment Manufacturers and dealers are experiencing rising inventory levels, with stock for several truck variants reaching 30-40 days. Despite banks and Non-Banking Financial Companies offering interest rates of 8-9% for 4-5 year financing, festival season purchases remain subdued.
Financial stress is evident among established fleet operators, with increasing instances of loan defaults and vehicle repossessions. The eastern and northern regions appear particularly vulnerable to these economic pressures.
Industry observers note the situation's complexity, as domestic economic concerns intersect with international trade policies. The sector awaits potential relief measures, including promised Goods and Services Tax cuts and income tax exemptions up to Rs. 12 lakh annually before the Diwali festival.
The trucking industry's outlook remains tied to broader geopolitical developments, including the possibility of extended European Union sanctions on Russian oil affecting India and the resolution of US trade policy. These factors will likely determine whether the current downturn deepens or begins to recover in the coming months.