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    New load-carrying rules: Will this be a bulldozer roll over commercial vehicle industry?

    Synopsis

    Many see Gadkari's order as a sudden step that will hurt manufacturers of commercial vehicles.

    New load-carrying rules: Will this be a bulldozer roll over commercial vehicle industry?PTI
    The new order has increased the official maximum load-carrying capacity of heavy vehicles, including trucks, by 20-25%.
    NEW DELHI: After India set for itself an ambitious target of having only electric cars by 2030, Union road transport and highways minister Nitin Gadkari made it a point to tell automakers that the government was serious about meeting the target. At the annual convention of the Society of Indian Automobile Manufactures last year, he said, "We should move towards alternative fuel. I am going to do this, whether you like it or not. And I am not going to ask you. I will bulldoze it."

    If you believe the auto industry, the government has rolled out another one a few days ago. It has increased the official maximum load-carrying capacity of heavy vehicles, including trucks, by 20-25%. Many see the order as a sudden step that will hurt manufacturers of commercial vehicles by bringing down demand and increasing costs.

    The order and the confusion
    Gadkari's statutory order came on Monday but a day later he suggested that the government would increase permissible load capacity also for trucks and tractors already plying on roads. He said the government would issue an advisory for existing fleet, allowing it to carry the load as per the new increased limits. There is no clarity yet if the old trucks will have to be modified to carry heavier load. It has also been reported that older vehicles would have to get an approval from the government to be able to carry increased load.

    Why the government has changed the norms
    The government has been trying to implement overloading norms more strictly which has led to an increase in the cost per tonne of sand, stones and other construction material, according to a Crisil report. The increased cost hindered implementation of infrastructure projects the government is keen to fast-track in an election year. Contractors who had bid for the contracts – especially in affordable housing and road construction – keeping certain rates for these commodities in mind, are finding it difficult to execute the projects. Besides, the load-carrying norms have remained unchanged for decades while the quality of roads and highways has improved immensely.

    How they are beneficial
    The new norms would be positive for infrastructure projects as moving construction material to project sites would turn cheaper. The government hopes new norms will bring down overloading. Besides, the new norms will cut freight costs and fasten movement of goods on highways. Logistics and transport sectors will gain from the new norms though quicker supply chains will have an overall positive impact on the economy. Society of Indian Automobile Manufactures (SIAM) said the new norms were a move in the right direction and improve the efficiency of commercial transport in the country.

    Why industry doesn't like it
    The order has led to stocks of several makers of commercial vehicles going down. The booming commercial vehicles sector is expected to see a sharp deceleration in growth as new axle norms are likely to create additional load capacity and hit demand. Industry players say replacement demand, which accounts for at least 25-30% of monthly sales for vehicle makers, could dry up immediately. Gadkari's order will boost the volume capacity of existing fleets as much as consumption demand for the next three years. This could potentially mean a loss of Rs 9,000 crore for the commercial vehicle industry over the next three years.

    There is also a view that new norms may not impact demand because a large number of trucks have been overloading anyway. The new norms will only legalise existing overloading.

    Though manufacturers agree the norms will help in the long run, they would have preferred prior consultation on the matter and a timeline for implementation instead of bulldozing the norms through a sudden decision. Manufacturing according to the new standards would require using new parts such as bigger tyres which may not be possible immediately.

    The industry would have liked to get at least a year for preparation. It could not only manufacture the new parts by then but also follow the new norms along with BS-VI norms, so that it could test vehicles for BS-VI with higher axle loads and change the design accordingly.

    According to SIAM, higher loads on vehicles will require upgraded tyres and new specifications of the axles for which the supply chain needs to gear up. "There is no date of implementation mentioned in the notification. As BS6 vehicles development is in full swing and many of the OEMs as well as the supply chain would need some time to upgrade product designs and certify these new vehicles, a clear date of implementation of 1st April 2020 aligning with introduction of BS6 vehicles would be more appropriate," said Dr. Abhay Firodia, President, SIAM.

    Business impact
    According to Crisil, the new step will have a visible impact in interstate movement, which accounts for the bulk of primary freight and where overloading is limited. Spot freight rates would soften. Large fleet operators, carrying dense bulk commodities, would be able to carry more freight, improving their margins. Contractual freight rates would remain resilient until the contracts are renegotiated. The logistics costs of most companies will come off. Small fleet operators would be impacted as efficiency gains from being able to carry more rated load per trip would be passed on through lower spot rates. Besides, the increase in the freight capacity would have less impact on intra-state movement where overloading is prevalent much more than in inter-state movement.

    Safety issues
    If older fleet is allowed to carry more load without modifications, it can create safety issues. Existing vehicles have been designed for a specific tonnage, with brakes, tyres, chassis, etc. tailored to that specification. Allowing vehicles to carry more weight could make them unsafe.

    According to SIAM, the existing vehicles on the road are not certified for safety with the higher axle loads. Hence, this provision should not allow the existing vehicles with higher loads or else it will tantamount to legalising the wrong practice of overloading of the vehicles. Such overloaded vehicles may or may not be able to meet the mandatory braking and steering performance requirements leading to safety issues on the road.

    Is it all politics?
    The new norms by the government appear to appease truck owners to prevent them from holding a nationwide ‘chakka jam’ stir from July 20, Indian Foundation of Transport Research and Training (IFTRT), an independent research body, told CNBC TV18. All India Motor Transport Congress has called for an indefinite nationwide strike, demanding diesel to be brought under GST and movement of trucks free of toll barriers. IFTRT said the timing of new norms showed that the government had gone ahead and issued the order without public debate.


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