New Delhi: In a move that could stoke inflation, India’s largest truckers union decided to intensify its protest demanding an easier tax regime after calling off talks with the government late on Wednesday evening.
The strike, called by the All India Motor Transport Congress, or AIMTC, began Tuesday and was partially successful with trucks staying off the road entirely in at least two states, Punjab and Karnataka.
Around 40% of the country’s freight moves by road and a prolonged strike could impact supplies to several parts of the country and stoke inflationary pressures at a time when it is at a 13-year high of 11.42%.
AIMTC, whose members own and operate 4.8 million trucks, had previously said trucks carrying petroleum products and essential items such as vegetables would be exempt from the agitation, and on Wednesday evening it wasn’t clear if the union would up the ante by keeping these vehicles off the road too.
The truckers are agitating for service tax concessions, the roll-back of an increase in toll charges, and for fixed taxes on diesel because they claim the current ad valorem, or on value, tax on the fuel has pushed up their cost of operation and eroded profitability.
To ease tax regime: A truck driver walks in front of parked trucks during a nationwide strike in Hyderabad. ( Krishnendu Halder / Reuters)
“In the last two-three years, the government has taxed us several times. They charge a cess on diesel for road building. Tolls have increased heavily. Also we pay huge amounts as bribes, besides paying Rs5,000 per state per year as national permit fees,” said Bahadur Singh of Ludhiana whose company Globe Roadways operates 25 trucks.
Toll rates between Delhi and Mumbai have almost doubled from two years ago to nearly Rs6,000 per trip, Singh claimed.
The country’s transport secretary Brahm Dutt said the strike had only a “10-25% impact on states on average”. He added that while the government has already told the truckers union that it would look at reducing the service tax, it was “not feasible” to remove tolls.
The impact of the strike on industry cannot be immediately assessed because most manufacturing companies operate with at least some inventory of parts. However, truckers in Chennai said that if the strike lasted, it could affect the operations of companies such as Nokia India Pvt. Ltd, Hyundai Motors India Ltd and Ford India Pvt. Ltd.
In West Bengal, the impact of the strike was negligible, with only an estimated 20,000 trucks staying off the road, while a majority of the state’s 230,000 trucks did not join the strike, the local truckers’ association said. In Punjab, the ruling Shiromani Akali Dal party supported the strike, with state chief minister Prakash Singh Badal endorsing the truckers’ views.
On Wednesday morning, AIMTC officials met with senior finance ministry officials as well as T.R. Baalu, the minister for shipping and road transport. Separately, Central Board of Excise and Customs member V. Sridhar, while addressing a press conference, signalled that the government would consider the truckers’ demand for service tax concessions. Currently, truckers pay a tax of 12.36% on a quarter of their revenues. They want this proportion to be reduced further.
India’s largest vegetable wholesale market in Delhi reported normal supplies, while in Andhra Pradesh the strike hit the supply of vegetables from neighbouring Karnataka and export of grains from the state. Retail traders said things could become worse if the strike lasts. “It hasn’t affected us yet, but if the strike continues, soon, we will start having problems,” said Sanjeev Mehra of the Federation of New Delhi and South Delhi Markets, a local trader body.
Udit Misra, Bajinder Pal Singh, Ajay Sukumaran, C.R. Sukumar and Aniek Paul contributed to this story.