Cartelisation impedes the smooth functioning of any industry, by rigging the market to benefit a few players. It usually involves competing firms fixing prices and blocking the entry of new players using a variety of tactics. Cartelisation is usually difficult to conclusively prove, since those involved are careful enough to not put down collusion agreements on paper. However, there is sufficient basis to say that the Indian transportation industry is a highly cartelised one.
In February 2015, the Competition Commission of India (CCI) imposed a penalty of 10% on the average turnover of the All India Motor Transport Congress (AIMTC), the apex body of Indian transporters and truckers, after receiving complaints of cartelisation.
The complaint, filed by S P Singh of the Indian Foundation for Transport Research and Training (IFTRT), stated that the AIMTC indulged in cartelisation by directing all its members to hike truck rentals by 15% after an increase of ₹5 in diesel prices was announced by state-run oil marketing companies in September 2012. The AIMTC, in turn, refuted the charges arguing that it is a highly fragmented industry, which is always under pressure due to escalating operating costs; and that the tariff is decided by market forces.
When the apex body has been accused of cartelisation by the CCI, one can expect that this malaise extends to the roots of the road transport industry. Indeed, a 2006 study (things have hardly changed since then) on the nature of the truck industry in the Mumbai Metropolitan Region by S Sriraman, professor of transport economics, Mumbai University, reports similar findings of cartelisation.
More than 70% of the industry comprises small operators who own less than five trucks. “This unique ownership profile has created middlemen who act as agents for small truck operators,” the study notes. And with big transporters moving away from an asset-heavy model to an asset-light one, this dependenc