Browse Month: July 2016

Rs 7 lakh cr to be spent to develop 50k kms of NHs

About Rs 7 lakh crore would be spent to develop around 50,000 kilometres of national highways over the next five years, the Government said on Monday.slider-image-2

During Question Hour in Rajya Sabha , Union Minister Nitin Gadkari said the Government has allocated a total Gross Budgetary support of Rs 46,834 crore including cess and toll remittance for 2016-17 for the Road, Transport and Highways Ministry.
In addition, internal and extra budgetary resources of Rs 59.279 crore have also been allowed to be raised for highways in 2016-17.
For the Ministry of Shipping, the Government has allocated a total gross budgetary support of Rs 1,531 crore. In addition, internal and extra budgetary resources of Rs 3,183 crore has also been allowed.
“There is a proposal to spend around Rs 7 lakh crore to develop National Highways of around 50,000 kilometers in the next 5 years. For Sagarmala port development, the project cost is Rs 73,375 crore and in respect of Sagarmala port modernization it is Rs 9,891 crore,” he said.

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Nitin Gadkari seeks US help to build smart transport systems 

India is seeking US cooperation in innovative technologies in Intelligent Transport Systems (ITS) with its policy shift from ‘Build Roads’ to ‘Move in India’ with special emphasis on efficiency and improving logistics.

This will be high on the agenda of Minister of Road Transport, Highways and Shipping Nitin Gadkari when he meets US Secretary of Transportation Anthony Foxx here on Monday. nitin-gadkari-480

He will also seek US cooperation in areas of project highways, material, equipment, tunnel projects, road safety initiatives and training institutes and equipment like training simulators.

Gadkari, according to an official accompanying him, will highlight the positive indicators contributing to the phenomenal revival of the roads and highways sector in India and brief Foxx about India’s leapfrog from Bharat Stage BSIV to BSVI emission norms by 2020.

Indian government’s particular emphasis on promoting alternative fuels for vehicles, utmost priority to reducing CO2 emission, notification of fuel efficiency norms for cars and heavy vehicles will also figure prominently in Gadkari’s talks with his counterpart.

Gadkari is scheduled to engage US infrastructure companies in a series of interactions organized by Indo-American Chambers, J P Morgan, Goldman Sachs and other business forums in Washington, New York and San Francisco.

He is expected to invite US industries to explore business opportunities in India including potential for investment in project highways, Bharatmala projects, asset recycling through Transfer-Operate-Transfer (TOT) model, tunnel projects and Intelligent Transport Systems (ITS).

Gadkari will appraise potential US investors of the fiscal incentives the Narendra Modi government has offered for the infrastructure sector, including 100 percent FDI through automatic route.

Other incentives include project land with ensured availability of right of way, capital grant up to 40 percent of project cost to enhance viability on a case to case basis provided by the National Highway Authority of India (NHAI) and the government of India

There is also 100 percent tax exemption for 5 years and 30 percent relief for next 5 years, which may be availed of in 20 years and duty free import of specified modern high capacity construction equipment facilitated.

Gadkari has envisaged around $150 billion investments for the highways sector in the next five years with a range of projects to suit each investor’s risk and return expectations.

He will also give a talk Monday on “A window into India’s Infrastructure Development “organized by Atlantic Council, a Washington-based think tank.

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GST can lower cost of logistics industry by 20 per cent

Logistics industry is projected to grow at a compounded annual growth rate of 15-20 per cent between 2015-16 and 2019-20 that will get a further boost if GST is rolled out from this year, which can trim costs by 20 per cent, says a report.
The much-delayed GST rollout can help boost the GDP by 100-200 bps as this will help faster and cheaper movement of goods across the country with a uniform taxation structure, said a report by Care Ratings.

“Logistics industry is likely to clip at CAGR of 15-20 per cent during 2015-16-2019-20 and if GST is rolled out this year this can bring down the logistic costs by up to 20 per cent from the present levels,” it said.

Cost can also come down drastically as a one-nation-one- tax GST structure can massively reduce the long and winding queues at border check-points and other entry points within and between the states.

Another reason for lower logistics cost is that operators will be able to rationalize and restructure their warehouses and other logistical infrastructure.

Due to trade barriers such as the entry tax, local body tax, Octroi and other hurdles, trucks idle for 30-40 per cent of the day, leading to huge man-hour and fuel losses, says the report.

Since GST will be levied on goods transportation and full credit will be available on interstate transactions, logistic cost is expected to come down by 1.5-2 per cent of sales due to warehouse optimization and the resultant lower inventory cost.

According to a recent World Bank report, corporates can save up to 40 per cent of their logistic costs incurred at check-posts and toll plazas.

According to the report, the higher growth of the logistic industry will be driven by e-commerce, GST rollout, government focus on local manufacturing, the new national integrated logistic policy, and 100 per cent FDI in warehouses, food storage facilities etc.

But in spite of large potential, the industry remains entangled in complexities such as higher costs, a myriad of complex tax structures.

The logistic sector is primarily divided into four segments — transportation, warehousing, freight forwarding and value-added logistics.

The transportation contributes the lion’s chunk of 60 per cent of the logistic pie, followed by warehousing compromising industrial and agricultural storage at 24.5 per cent. Packaging and other related businesses constitutes the rest of the segment.

Explaining the complex web of taxes that states impose on goods and services, the report notes that currently, each state taxes goods that move across its borders at various rates, leading to multiple taxation.

The present taxation rate peaks at 26.5 per cent (Cenvat of 14 per cent, and VAT of 12.5 per cent) apart from the state level corporate tax of 2 per cent for transferring inter-state goods.

The proposed dual GST model (central GST and state GST) proposes to replace around 29 state and federal taxes and tariffs for a single tax at the point of sale. The current combined Centre and state statutory rates for most goods works out to be 26.5 per cent but GST is expected to bring it down to 18-21 per cent.

The existing interstate taxation system has forced companies to create and maintain warehouses in each state and at present each company has 20-30 warehouses, in addition to this 20-30 carry & forwarding agents in each state making the supply chain longer and inefficient.

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Indian Trucking industry – What a transformation!

India and trucks have a unique relationship. This is true to a large extent even today. The reason is that India is one of the few countries where the power-to-weight ratio in trucks is the lowest. There are six-lane highways. Talking about eight lanes as prevalent in foreign countries is a far cry in terms of road infrastructure development. The Indian truck or rather CV industry is one of the very few industries minimally impacted by foreign companies, or rather has largely resisted market penetration by global majors.


Unlike the passenger car segment where there are many major groups, the global CV industry comprises a handful of companies that dominate, and with the exception of PACCAR most other companies are present in India either through a subsidiary or through equity partnerships. While home-grown truck makers like Tata Motors, Ashok Leyland and Eicher (though now Volvo-Eicher) have given a tough fight to the global rivals, it looks like their hold on the market has only gotten stronger.

Indian trucks are unique in a number of ways – the lowest power-to-weight ratio, aftermarket wooden cabin, wooden load bodies, no AC provision in most vehicle models, no sign of migration to tubeless radials, etc.

India is a growing economy and transportation is an important sector contributing to economic growth. While the transport sector usually grows in tandem with the GDP, the fall is always steeper than the rise. The TIV of M&HCVs (GVW above 7.5T) in the Indian market is around 3 lakhs and that of LCVs (GVW less than 7.5T) is almost a little more than double the size of M&HCVs.

Despite the TIV of the entire CV industry being close to a million trucks and buses, India is still way behind the actual requirements in terms of performance and technology which actually indicates the market has plenty of opportunities for growth and change in the coming years.


It was in 2008 that Tata Motors launched its much-awaited global truck platform Prima in collaboration with Daewoo, a result of its aspiration to become a global player. The Prima was launched at the right time when the Indian trucking industry was sailing high in terms of sales and capacities. The Prima was so technologically advanced that it made a mockery of all the above statements about the Indian trucking industry being primitive in nature. When launched, the smallest variant of the Prima was the 4028S with a 280hp engine and loaded with a host of features. Now, Tata Motors has made available the Prima LX, a more affordable platform, to suit specific customer requirements, while the Signa is its new entry level range launched with the aim of raising the standards in the mass market segment.

A few years later, when BS III kicked in, in 2010, it was Ashok Leyland’s turn to bring out a new platform, the U-Truck, which was a step ahead in the right direction which allowed AL to migrate its products from the traditional 120+ hp engine in 16T trucks to engines with 160 hp. AL had made several attempts in the past for offering higher hp variants, an important one being its array of products with 260 hp J series engines.

In fact, in 2004, a set of products – 3126J and 4026J – were indigenously developed in this category and launched along with NewGen Cab, but the 8L engine was too futuristic for India at that point of time. Later in 2015, AL launched its new platform Captain, which will be the company’s face for the next decade at least.


If Tata Motors and Ashok Leyland have been building the Indian CV industry since Independence, it was Asia Motor Works (AMW), a new entrant in the early last decade, which moved the trucks one notch higher. There weren’t too many fully-built trucks at the time AMW came on the scene. Nor were ACs heard of in trucks. AMW made all this possible by building trucks with aggregates that were quite familiar in the Indian market at that point of time. AMW did not focus on designing a new engine or a cabin but put together a rigid and optimum powertrain with the right kind of vehicle integration to succeed in the Indian market. At one point of time, AMW was challenging Tata and AL in mining trucks, which became its bread and butter segment, thanks to its 2528TP and 2523TP models.

During this phase, MAN made an entry into India with its CLA range which catered to niche applications, delivering a whole new level of performance. While the bright yellow and simple cab design and hub-reduction prime movers were its signature, its 4 cylinder-engine was a first-of-its-kind for heavy duty trucks at that time.

The competition started hotting up after 2010 when Mahindra made a foray into the M&HCV space. Unlike other players, Mahindra already had its strong presence in the SCV category and boasted a share of over 70 per cent in the pick-up market. Its aspirations to become a full-fledged automobile company drove it to partner North American trucking giant Navistar to enter the M&HCV market in India.


With full first page advertisements in top dailies and with its ‘Ok is no Longer Ok’ slogan, Mahindra Navistar marked its market entry in style. After a promising start, Navistar had to exit the JV leaving Mahindra to go solo. Mahindra cabs are still among the best and most user-friendly and are considered a benchmark by many in the field.

Then came the all-important entry from global market leader Daimler. What made Daimler’s entry into India special was its move to create an India-specific brand BharatBenz, something which it had never done in any market in more than 100 years of its history. Having done a deep study of the Indian market conditions, product requirements and customer usage patterns, Daimler came up with a truck range that offered so much value for money in terms of factory built cabs, higher power engines and a lower total operating cost. Within a couple of years of market launch, BharatBenz reached No.4 in the pecking order, a good testimony to a successful start to the world leader’s long-term campaign in the Indian market.

Amidst all this was the rise of the Eicher brand through Volvo-Eicher Commercial Vehicles. Though the joint venture was formed in 2008, the big breakthrough for Eicher was with the launch of the Pro Series range in 2014, which signalled a complete product portfolio overhaul, making the company future-ready. VECV has been an excellent example of how a joint venture can transform a company. With cabs from UD Trucks, engines from Volvo, and a whole-new fascia design, the new array of products under the Pro Series tag are setting new benchmarks in the industry.


With all these developments from the top guns in the Indian truck industry, it would be appropriate to say that India has a level playing field on the OEM side. The biggest gainer of course would be the customer who now has plenty of world-class options to choose from and deservedly enjoys the attention of all OEMs. This is in keeping with the saying that ‘the customer is king’.

Coming to the premium segment, Volvo was the first to enter the deep mining area in India with its FH series. Later, it came up with variants and new products, including its current flagship the FMX 440 8×4 tipper.

With Volvo offering trucks with a host of top-end features, it was no surprise that 15 of the 20 features mandated by DGMS were available as standard features in Volvo vehicles.

Daimler brought in the Mercedes-Benz Actros for the Indian deep mining segment, but after bagging an order for 150 units from BGR Mining, it changed its strategy and revamped its product offering for the space. Now, Daimler offers the BharatBenz ‘Thunderbolt’ range of tippers which are the first locally-made products to enter the deep mining segment in the country.


Scania’s entry into the premium truck market made things interesting. The Swedish truck maker works with L&T in the mining segment, a combination that has been largely successful till date. Scania’s compact P-series suits the vast majority of distribution and construction needs in the Indian market. All three ranges of Scania tippers P, Q and R are available in India with varied power train options to suit different applications.

With this overview of the Indian truck market, we highlight in the following pages some of the new generation trucking platforms and models which are set to script the future of Indian trucking.

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SC Diesel Ban: Truck sales in NCR choked after drive against air pollution

NEW DELHI: The Supreme Court imposed ban on big diesel-powered passenger vehicles in the National Capital Region has hurt commercial vehicle makers as well, and they are unsure when they will have some clarity on the matter.

The National Green Tribunal (NGT) in its ruling on December 11 had barred vehicles older than 10 years from plying on roads in the capital and stalled registration of all diesel vehicles to curb air pollution.

While the Supreme Court intervened later that month and imposed a ban on the registration of passenger vehicles sporting diesel engines displacing 2 litres and more in the whole of NCR Delhi and its satellite cities in adjoining states no clear directions were given on commercial vehicles.

But registration department officials in the region put a halt on the registration of new CVs with 2 litre and higher capacity diesel engines. “It is a catch 22 situation now,” a senior industry executive said, speaking on the condition of anonymity.

“The Supreme Court has refused to clarify the matter stating it never deliberated on commercial vehicles. The NGT, on the other hand, has said that since the apex court is deciding on the issue of registration of diesel vehicles in Delhi-NCR, it will not intervene.” To be sure, this doesn’t directly affect CV sales within Delhi, because any vehicle plying for commercial purposes within the city needs to be powered by CNG.

But it is a problem in the satellite cities that form part of the NCR. With the ban stretching into the eighth month now, makers of commercial vehicles are in a fix.

Like in the passenger vehicle space, the NCR is the largest market for medium and heavy commercial vehicles, accounting for 8-9% of country’s monthly sales of around 2,000 to 2,500 units. The directive of the NGT to not allow old vehicles on Delhi roads was initially expected to generate replacement demand for new trucks. The ban on new registrations, however, ended up clogging the medium and heavy truck market in the region, said industry observers.

Tata Motors said the company is hoping for the final order of the Supreme Court to shed some light on the issue. “We will await details of the order, before we make any comments on the subject,” said the company spokesperson.

Some fleet operators are bypassing the ban by registering vehicles outside the NCR. Diesel vehicles on All India Transport Permits can enter Delhi, but are required to pay a green tax. “The major impact is being felt on medium and heavy duty truck sales, as buses have already been converted to CNG.

Due to imposition of higher green tax, the business model of local transporters are disturbed as it is clearly an additional cost to him on daily movement of vehicle within the NCR,” said a senior executive on the condition of anonymity. The industry has made several representations before the court, the tribunal and the government.

“The Society of Indian Automobile Manufacturers has appealed to the government and is now a party to the case before the NGT,” said the industry body’s director-general, Vishnu Mathur. There has not been much headway in the case.


देशभर में बनेंगे 15 लॉजिस्टिक पार्क !

मल्टीमॉडल ट्रांसपोर्ट व्यवस्था को अमलीजामा पहनाने कतथा परिवहन लागत के साथ ही वस्तुओं की कीमत में कमी लाने के लिए सरकार देश के 15 प्रमुख व्यापार केंद्रो पर लॉजिस्टिक पार्क स्थापित करेगी। इस परियोजना पर 33 हजार करोड़ रुपए का खर्च होने का अनुमान है। लॉजिस्टिक पार्क स्थापित करने का मकसद देश के विभिन्न हिस्सों से बड़े ट्रकों, मालगाड़ियों अथवा जलपोतों के जरिए आने वाले सामानों का क्षेत्रीय स्तर पर एक जगह अस्थायी भंडारण करना और बाद में छोटे ट्रकों के जरिए उसे नियत स्थानीय खपत केंद्रों तक पहुंचाना है। लॉजिस्टिक पार्कों में कंटेनर व पार्सल के अलावा घरेलू उपयोग की वस्तुएं , खाद्य तेल दूध व दूध से बने उत्पाद, चावल, गेहूं, चना व दालें, फल व सब्जियां, रूई, लकड़ी एवं प्लाईवुड, कागज उत्पाद, बिजली का सामान, भवन निर्माण सामग्री , सीमेंट व स्ट्रक्चरल्स, ग्रेनाइट व संगमरमर, लोहा एवं इस्पात, भारी मशीनरी, कोयला, पेट्रोलियम तथा लौह अयस्क जैसी वस्तुओं का अस्थायी भंडारण किया जाएगा।


कहां-कहां बनेंगे लॉजिस्टिक पार्क
सबसे बड़ा लॉजिस्टिक पार्क दिल्ली-एनसीआर (दिल्ली, गुड़गांव, गाजियाबाद, फरीदाबाद और नोएडा) में बनेगा। जबकि मुंबई (मुंबई, उपनगरीय इलाके, जेएनपीटी पोर्ट, मुंबई पोर्ट तथा रायगढ़ जिला) का दूसरा नंबर होगा। इसके अतिरिक्त उत्तरी गुजरात ( गहमदाबाद व वड़ोदरा) व दक्षिणी गुजरात (सूरत व भड़ौच) तथा उत्तरी पंजाब (अमृतसर, जालंधर व गुरदासपुर) व दक्षिण पंजाब (लुधियाना, संगरूर और पटियाला) के लॉजिस्टिक पार्क भी काफी बड़े होंगे। अन्य पार्क चेन्न्ई, हैदराबाद, जायपुर, कांडला, बैंगलुरु, पुणे विजयवाड़ा, कोच्चि और नागपुर में स्थापित होंगे।
कोलकाता या पूर्वी भारत को फिलहाल लॉजिस्टिक पार्क के लायक नहीं समझा गया है। जबकि गुजरात में सबसे ज्यादा तीन लॉजिस्टिक पार्क बनाए जाएंगे। लॉजिस्टिक पार्कों के लिए कुल मिलाकर 4816 एकड़ जमीन की आवश्यकता होगी। इसमें 2000 एकड़ का इस्तेमाल स्टोरेज स्पेस क रूप में जबकि 1600 एकड़ का वाहन पार्किंग, रेस्त्रां, ड्राइवर रेस्टिक एरिया, फ्यूल स्टेशन, सर्विस/इंटरमोडल एरिया व अन्रू सहायक ढांचों के निर्माण में किया जाएगा। पार्कों के लिए भूमि अधिग्रहण पर 10665 करोड़ के खर्च का अनुमान लगाया गया है । दिल्ली एनसीआर का लॉजिस्टिक पार्क 856 एकड़ जमीन पर बनेगा।
इस पर 6431 करोड़ रुपए की लागत आंकी गइ्र है। जबकि मुंबई पार्क 813 एकड़ में 5818 करोड़ रुपए से बनेगा। उत्तरी पंजाब पार्क में 1704 करोड़ का खर्च आएगा और इसके लिए 267 एकड़ जमीन की जरूरत पड़ेगी। इसी तरह दक्षिणी पंजाब का पार्क 1505 करोड़ की लागत से 226 एकड़ जमीन पर बनाया जाएगा। उत्तरी गुजरात का पार्क 488 एकड़ में 2668 करोड़ क खर्च से बनेगा। जबकि 1579 करोड़ लागत वाला दक्षिणी गुजरात का पार्क 279 एकड़ में फैला होगा। पार्कों के निर्माण व प्रबंधन के लिए सरकार निजी क्षेत्र की भागीदारी में एक मल्टीमॉडल कंपनी का गठन करेगी। इसमें सड़क परिवहन मंत्रालय, रेल मत्रालय तथा जहाजरानी मंत्रालय की हिस्सेदारी होगी।। इसके प्रबंधन एवं संचालन के लिए पीपीपी आधार पर निजी क्षेत्र को भागीदार बनाया जा सकता है।

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Truck rentals down 1.5% on drop in cargo availability, delays in return load

Drop in cargo availability coupled with delays in return load from the manufacturing sector has resulted in truck rentals declining by 1.5%.

This is despite a hike of INR 3.52 a litre in diesel prices in June. July too may not witness any visible buoyancy or major fluctuation in truck rentals on trunk routes.

Operators could not pass on the burden owing to a drop in cargo volumes, said Indian Foundation of Transport Research and Training (IFTRT), the apex body tracking the truck industry.

During June 2016, there was an all-round drop in cargo availability led by 15% lower arrivals of fruits and vegetables in APMCs and about four-five days delay in availability of returned load from manufacturing sector; even the cargo availability from cement, fertilizer and timber was just steady.5_b

Ever since diesel price was deregulated in October 2014 with a rider for OMCs to have fortnightly price revisions in line with international crude oil price and rupee-dollar parity, truck rentals for the first time in the last 21 months broke away from direct relationship in freight rate movement in relation to revision in diesel price.

During June 2016, truck rentals could not only absorb the substantial diesel price hike of INR 3.52 a litre but also dropped by 1.5% on most trunk routes, while the open market was expecting a 3.25% increase.

According to the foundation, the sudden reversal in rental movement delinked from diesel price was mainly due to a fall of over 15% in the arrival of fruits and vegetables and other agri products like pulses into the AMPCs and wholesale grain markets.

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