Volvo eyes long haul transportation segment in India as GST rollout expected in near future

Swedish commercial vehicles major Volvo is eyeing long haul transportation segment in India with GST rollout expected to spur growth of the category.

The company, which makes premium trucks for specialised sectors like mining, buses and construction equipment, also aims to cut logistics cost by achieving greater efficiency and minimising wastage.

“With GST coming in and changes in taxation, there will be positive changes in the transport sector and we would like to play a role, for instance in the long haulage transport, which would be more effective now with cross-border traffic between various states,” Volvo Group Chief Sustainability Officer and Chairman of the Board of Volvo India, Niklas Gustafsson told PTI.

Currently, he said, due to the long wait for commercial vehicles at state borders for paying entry taxes, it is not economically viable to operate such large long haul trucks.

The company believes it can be part of the solution for transporting goods over long distances, he added.

The GST would replace a plethora of cascading central, state, inter-state and local taxes with a single, nation-wide, value-added tax on goods and services.

The government now expects to roll out GST by July 1 after revising its April 1, 2016, target.

Elaborating further on the company’s roadmap, Volvo India Managing Director Kamal Bali said that so far, it only had presence in mining segment as far as its trucks were concerned.

“In mining sector, value proposition of Volvo trucks is very strong. Our efficiency and productivity was 30 per cent more than competition but when it came to long haul transportation due to interstate borders, the advantage disappeared because of the long wait at the borders.”

With GST roll out round the corner promising seamless movement of trucks across state borders, Volvo trucks would be able to cover a lot of distance.

“Today, trucks in India do an average of around 250 km daily and that can go up to as high as 800 kms. That is where Volvo technology will come into play,” Bali said.

The company already has the trucks which can do long distance haulage of goods in the country, he added.

“Besides, the next possible step in India is to check wastage..logistics cost in India is 13 per cent of the GDP which is very high. The global average is around 7-8 per cent so, I think efficiency will play a vital role,” Gustafsson said.

Bali said the company is doing a lot of work in IT and technology area and big part of its vehicle engineering and design is happening at Bengaluru.

“Also, Volvo group is sprucing up Eicher range in the heavy duty trucks segment..it’s happening both ways—the synergies between Eicher and Volvo group,” he added.

Volvo Group has a joint venture with Eicher Motors in India—VE Commercial Vehicles.

When asked about the impact of demonetisation on the company, Bali said: “There was a temporary impact for 1-2 months but the trucking segment bounced back in January.”