The Indian Ministry of Home Affairs has given the state governments permission to implement localised lockdowns in Unlock 3.0. However, this has not helped to lift the uncertainty that has been prevailing over the road transport sector. In most of the states, partial road transportation is now being allowed except for the complete lockdown days. The real problem for the sector remains poor demand in the market, spiralling operating costs and resurfacing of corruption on the highways. The transportation sector faced a daily loss of around `2200 crore before the central government decided to implement a phased unlocking process. However, uncertainties remain and the sector is yet to recover as full-scale economic activities remain a far cry.
Naveen Kumar Gupta, General Secretary, All India Motor Transport Corporation, informed BE, “The pandemic has destroyed this sector and the government’s attitude towards it coupled with regressive policies like the ‘Imminent Vehicle Scrapping Policy’ has worsened the situation. It will further lead to de-growth. The three quarters of FY 2020-21 are really bad for the road transport sector. The small operators - who are about 85% - are on the edge. The idle capacity of the goods vehicles is about 50% and the rising operating costs be it diesel price, tolls and salaries do not commensurate with the freight in the marketplace which largely depend on market forces. About 20 crore people are directly or indirectly dependent upon this sector.”
Affected activities of road transportation
More than the logistics segment, road transportation is the concern now. It is actually the key link to the supply chain of most industries and businesses. During the nationwide lockdown, the industries were shut, manpower had migrated and the supply chain got disrupted. The operating cost is getting high but the demand remains weak due to poor consumption patterns. The condition of tourist and passenger transport operators on the road is equally bad. The tourism industry has collapsed, work from home is being preferred and schools are closed. The opportunities for the sector have grossly declined.
Gupta added, “The unlocking 3.0 should help the transport sector if it stimulates economic activities and demand in the market. The end of moratorium on bank repayments in August may trigger a shakeout in the long and medium-haul truck segment. A substantial part of the unorganised small players may exit. There is every possibility that India’s long and medium haul trucking sector will be greeted by chaos and shakeouts. The trailing impact will be felt by lenders and the automobile industry as well.”
Expecting an improvement for the sector, the Indian commerce ministry is contemplating to replace the Multi-modal Transportation of Goods Act with a national logistics law – the National Logistics Efficiency and Advancement Predictability and Safety Act. This law will help the country’s logistical sector to ensure better regulation while securing a good position at the Logistics Performance Index.
Along with the road transportation sector, both the domestic and international aviation sectors are heavily impacted. The Indian aviation sector was valued to lose around `25,000 crore of revenue because of the lockdown. The central government banned commercial international flights since March 23, 2020. It has impacted the aviation sector and also hampered the import-export ecosystem. Starting from textile and handicrafts, leather, tea, fruits and flower supply to Information Technology (IT) - every sector has been impacted by the closure of the aviation sector. For the IT industry, major business tours got cancelled. Exports were heavily hit and many exporters had to cancel orders. No new orders could not be secured for the same reasons.
The government has recently allowed a number of international aviation facilities under the ‘Vande Bharat Mission’ - that stepped on the fifth phase on August 1, 2020. But this mission allows only repatriate flights and air carriers like Air India, IndiGo, SpiceJet and GoAir - those which are undertaking evacuation operations. The Indian aviation ministry has also announced ‘Air Bubbles’ - a bilateral agreement with the US, France, Germany and other gulf nations to ease the process. The Director General of Civil Aviation (DGCA) has recently announced that the international commercial passenger flights will remain restricted till August 31 to minimise the spread of the virus.
With no immediate redressal in sight, the aviation industry is going through a severe phase. Several cost cutting measures like pay cuts, forced unpaid leaves and job cuts have been unleashed by aviation companies which have increased the problems for professionals working in the sector.