Lockdown, Steep Fuel Prices, Lack of Govt. Support Brings Indian Bus Body Industry to Standstill

The pandemic has devastated the transport industry, but the passenger transport sector in India bore the most brutal brunt of all. Since the lockdown was announced, there has been an unparalleled reduction in travel and commercial activities, and even after restrictions were relaxed, the fear of contagion kept passengers away from taking public transport.

Adding insult to injury, the consistent hike in price of diesel since the last fiscal has broken down the spine of the industry. At the same time, no relief packages from the government was witnessed in any form.

“Ever since the lockdown was announced in March 2020, our vehicles have been on the road sparingly. Even though we adhered to all safety & hygiene precautions, we were only allowed to operate buses at 50% occupancy, which cannot even offset diesel prices. At the same time, there was no relief from road tax, fitness, insurance EMI, toll gate payment, etc.,” says Rishi Raj Phukan, Managing Director, Rishi India Transport, Assam.

With low occupancy rates, high diesel prices and an uncertain future, fleet owners and transporters are reluctant to invest anymore.

These problems are trickling down to the bus building industry

The bus body building and passenger transport industries are interlinked. So, the slump in sales of bus chassis is translating into a disastrous present for the bus body building industry in India.

According to Rahul Tom, Managing Director, Kondody Autocraft, Kottayam, Kerala, orders for bus bodies have dropped drastically in the 2020-21 fiscal. While the annual production in 500 & 400 buses in FY18-19 & FY19-20 respectively, the firm received only 15 orders in FY20-21.

“The bus transport sector is amongst the most severely affected by the pandemic and also the hike of over ₹15 in diesel price during the last fiscal. Investors are thus reluctant to invest in new buses which cost approximately ₹37 lakh for 50-seat ones and ₹26 lakh for those having up to 40 seats,” he states.

Bus body builders across the country have similar stories to share. 

In a bid to understand present dynamics of the private bus industry and bus body building industry in India, we reached out to some of the eminent players of this domain.

According to them, the pain points of the bus industry in India can be summarized into the following main factors:

Recurrent Lockdowns Impacting the Indian Bus Industry the Most

Since early 2020, India has been witnessing lockdowns on and off in various states. It makes it extremely difficult to run buses because inter-city mobility has been reduced to virtually zero. This has greatly impacted bus owners across the country.

“Ever since the lockdown was imposed last year, there has been very limited inter-city movement. This is thoroughly affecting bus owners across the country. As a result of this, we are also experiencing lesser work demand, discrepancy in payments, etc,” Gurpreet Singh Sehmi, Prakash Body Construction Company, Assam.  

As bus owners’ income dwindle, bus body builders are compelled to deal with fewer work orders, discrepancies in payments, and many other severe problems.

Rising Diesel Prices A Death Knell for the Indian Private Bus Industry

Already the private bus sector is suffering heavily from recurrent lockdowns, and now consistent rise in diesel price despite slower demand has put the sector at a path of peril. The record-high diesel price has impacted the livelihoods of millions of people dependent on the bus sector.

“Over the last year, demand for bus body work has dropped drastically. Normally, we build around 150 buses in a year, but since the lockdown was imposed we aren’t getting one tenth of this number. This is effecting livelihood of a lot of people - right from bus owners to unskilled labors. The bus body industry cannot revive until the passenger transport industry gains momentum,” states Sunil Kr. Jangid, Satyanaran Coach Builders, Gujarat. 

For the uninitiated, about 3 crore individuals earn their living from the bus industry in India and about 90% of them are from the private sector.

Across the country many transport owners, wage earners and unskilled laborers have already lost their earnings completely.

A Sharp Dip in Commercial Vehicle Loans

Banks and even non-bank lenders are hesitant to give loans to commercial vehicles because of the continued slowdown in auto sales and the uncertain future. 

In a recent report, growth in vehicle loans given by banks sharply fell to below 5% in April 2020 in comparison to 2019 when the growth was nearly double this. Among the automobile sector, commercial vehicles bear the maximum pressure.

Commercial vehicle loans given out NBFCs have witnessed the sharpest fall of 38%.

The government’s new axle load norms increased the freight capacity of the existing commercial vehicles by 20 per cent. It simply means there is less purchase of these vehicles because the demand fell drastically. So, banks and NBFC see marginal loan growth in these segments.

Fear of the Third Wave Keeps the Industry on its Toes

The pandemic is so unpredictable and the vaccination drive is so slow that people can’t get any clarity on what would happen in the next few months.

After the distressing effects of the COVID-19 second wave, private bus owners in India are very skeptical of investing in buses. On the contrary, many bus owners have already sold their vehicles and started less lucrative businesses. 

Hence, the fear the third wave of the COVID-19 pandemic in India has been instrumental in creating a volatile market.

“Fear of third wave is keeping orders at bay. The main problem is, there is no clarity on what the next few months will be like. Especially after the devastating effects of the second wave, bus owners are very skeptical of the immediate times to come and are refraining from investing on buses,” reveals Vikas Suthar, Shree Pushkar Motor Body Repairs, Rajasthan. 

How the Government Can Aid the Private Bus Industry in India

Like many other countries such as Germany, Hong Kong, China, Kazakhstan, etc., the ruling Indian government can, for one, provide bailout packages to revive the country’s public transport system. 

It may be a direct financial support or it can come up with indirect support in terms of tax rebates.

There are demands of central government intervention from the industry to support employees and bus owners and reschedule debts – both principal and interest and waive taxes for up to three months to minimize costs.

The Road Ahead for the Private Bus Industry in India

PC: PTI

Bus operators across the country have already been exercising prescribed COVID-19 protocols of social distancing, sanitization, and allied hygiene standards. While social distancing protocols have cut the revenue by a large percentage, sanitizing buses regularly, procuring protective equipment for bus employees has resulted in increased operational costs.

However, passenger sentiments continue to be low owing to the fear of contagion.

As a whole, the bus industry in India is grappling to stay afloat. The entire industry has been demanding the government to intervene and explore possible avenues for tax reform and relief packages since the last year to no avail.