The Economic Times of India reports that commercial vehicle manufacturers have raised volume growth estimates for ’05 from 8% to 19% and for ’06 from 7% to 14% with the recent withdrawal of the ‘golden pass’ by eight northern and central Indian states.
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The golden pass allows trucks to carry more load than sanctioned under the law, on payment of penal charges in a state. These states, which were earlier issuing golden passes have either tightened or stopped the issue of these passes from the end of last month and plan to phase it out by March ’04.
The Times says that there are about 2m trucks in India, out of which 28% are registered in these eight states. According to auto analysts, if the system is strictly implemented, the freight carrying capacity will come down by an estimated 9-10%, which is roughly equal to a year’s freight capacity. As a result freight rates should firm up by about 10-15% to cover the higher fixed costs per tonne of load.
CV manufacturers say that overloading among truck operators is rampant in India, which leads to more breakdowns, road accidents and wear and tear on roads, insurance claims and lower toll collections.
The report added that commercial vehicle makers, such as Ashok Leyland and Tata Motors, are struggling to cope with unprecedented demand.
