Factors That Affects The Transportation System In India

The transportation sector directly related to the growth of the economy and density of population

. India, as the worlds second most populated country need a huge network of commercial vehicles to fulfill its transportation requirement. If it is about goods transportation then India is more dependent on road transportation then the railways. However railway is also dependent on goods transportation for its 70 % (approximately) revenue. As per certain statistics the growth rate of road transportation is almost double in comparison to the railways. So it will be not wrong if we will say that Indian fleet owners are mainly handling the transport system.

There are a number of factor that are responsible for the hike of road transportation system such as:

The liberal Indian business policy- From last two decades Indian government is quiet liberal regarding its business policies which makes an opening for multinational automobile companies. So today we have more and better options that can justify the requirement of developing India, which is ultimately beneficial to the end-users. Truck transport business in India is most important for Indian transporters. In this segment due to competition and demand today we have more options which encourage the replacement system that means small operators can go for used vehicles. Generally in India large fleet owners switch to modern technology after 4-5 years which creates an easy scope for small operators as they can run the same vehicle for another 10-12 years. Small operator means owning five trucks or less and around 75% of transporters are small operators.

As a business it generates huge revenue, which attracts a number of players in to it. This system depends on the kind of goods to be transported and number of trucks required for that. With new technology we have big machines that can replace average three trucks but geographical location and road density also matters. So depending on the situation the profit varies.

Better road quality is also an important factor as it can affect the life of the machine and spillage of material which ultimately affects the cost of transportation. In this regard to counter the challenge Indian government is showing its seriousness as a result today we have better roads in the shape of different government projects. However there is still a lot more scope for improvement.

There are also a number of negative factors that can affect the growth of auto transport companies in India such as:

Fuel price India is not self sufficient to meet its fuel consumption target as a result depending upon the world crude oil price it fluctuates. If accordingly the freight rate cannot be changed then definitely the transportation system will be affected.

Excise duties- Though we are in the age of globalization but still in the category of developing countries so a little deviation in taxation can really matters a lot to the small operators as we have less organized business zone. In this regard production cost is also a major issue.

by: Ashok Mehta

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