20110630_Carriage ByRoad Rules 2011

India to reorganize its road freight industry Until the 2007 Carriage by Road Act, road transport – by far the most vital mode of transport for the booming Indian economy – was framed by the rules of the 1865 Carriers Act. It took four more years for the Ministry of Roads and Highways to write a draft for the Act’s implementation rules, which were made public last February. But faced with discontentment from lorry drivers, most of the provisions of the draft were toned down in its final version last April. Even so, an independent road transport research center body, IFTRT, complains that no one really knows whether this piece of legislation is indeed in effect.

Share of different modes of transport in Indian GDP (at factor cost and constant price)

New registration rules for carriersThe 2007 Carriage by Road Act defines the relationship of common carriers – such as goods booking companies, transport contractor, agents, brokers, courier or logistics firms, packers and movers — with consignors/consignees such as traders, manufacturers, distributors of goods. It makes compulsory for Goods Transport Agents (GTA) to register themselves with the respective State Transport Departments.

Source: Government of India, Planning Commission for the 11th 5-Year plan, 2007

Anil Syal, Vice-President of Marketing at Safexpress, one of India’s leading logistics company regretted in September 2010 that, “every driver who owns a truck or has a few trucks at his disposal calls himself a road carrier these days. Some even call themselves logistics operators".

With the new rules of implementation, the road freight sector will be managed in a more efficient way.

The firms involved in this sector will have to maintain their quarterly records of all transactions: data will be available for the type of goods being transported, the locations, and distance covered etc. It will help the government provide better infrastructure on busier routes.

This would also significantly reduce the number of transactions in the transport sector outside the tax net. Last not least it will give companies data about which locations are better for setting up factories.

A long-waited organizational moveIt took over 4 years for the Road, Transport and Highways Ministry to chalk a draft of the implementation rules for the 2007 Carriage by Road Act, which was notified in February 2011.

S.P. Singh, researcher at the Indian Foundation of Transport Research and Training (IFTRT) highlighted the issue of antediluvian rules for road freight in March 2011, “This will help regulate the sector and bring some discipline. Our estimates suggest that items worth between Rs 8,000 crore and 10,000 crore are either not delivered or are damaged in transit due to the negligence of Goods Transport Agents, including packers and movers”

According to the draft rules, the registration could be cancelled temporarily in case the common carrier does not apply certain rules such as non-issuance of booking receipts, non-disclosure of location of goods in transit or non-payment to truck drivers.

The draft implementation rules of the Act proposed gradual penalties for the perpetrators: first violation led to a two-weeks suspension, second violation to a one-month business suspension and cancellation of licence, in case of a third violation.

Introduction of liability and responsibility for transportersThe new rules made mandatory for the consignee to prepare a forwarding note giving details and volume of the cargo while booking it. The document will have to disclose the number of packages, details of the items, purchase and insurance, whether these are hazardous or non-hazardous and the value of the consignment.

In its draft Carriage by Road rules of February 2011, the Road transport and Highways Ministry made provision for the transporter to pay the consignee an amount of ten times the freight paid if the consignment was lost or damaged.

Anil Syal, Vice-President of Marketing, Safexpress acknowledges that the balance of liabilities between transporters and their customers was archaic: “The smaller carriers, who earlier were able to go scot-free, in case of any breakage, will now come under the scanner. Earlier, almost 90% of the liability of carriers was escapable. Now, this will not be possible. "

Discontentment among truck driversIf the reform of road freight seems inevitable, it is not sure whether truck-drivers are going to accept it smoothly.

G. R. Shanmugappa, All India Motor Transport Congress (AIMTC) President warned in an interview on 20 April 2011: “It will not be possible for the road transport fraternity of our country to comply with the registering formalities. Transporters are willing to compensate the consignee in case of criminal misappropriations. However, it the damage has been caused due to accidents, Carriage by Road Rules would give an opportunity to police and law enforcement agencies to fleece us. This is not acceptable to us”.

Confronted with such strikes’ threats by the AIMTC Union, the Government decided to settle for a one-week business suspension penalty in its final Carriage by Road rules announced on April 30 th

and not the gradual penalty scheme it had previously envisaged in its February draft.

It is likely that the Government is trying to avoid the risk of a dispute with AIMTC, an union of 700,000 members that could put the Indian supply-chain on its knees using road-blockades. A senior official in the ministry of road transport admitted on 30th April that liabilities rules could be relaxed, reckoning that the ministry was looking to what could be done to please transporters. According to him, lorry-drivers were particularly protesting on the liability and punishment provisions introduced in the Act.

Though Goods Transport Agent firms should have applied for a registration and the rules by May 31st, a member of the Chennai Goods Transport Association was telling last June on the Indian Foundation of Transport Research and Training (IFTRT)-run forum that The State Transport Authority in Tamil Nadu was not even aware about the registration procedure provided for by the new implementation rules.