Tolls Keep India From The Fast Lane

Country Struggles Within Its Own Borders To Improve Trade

(Christian Science Monitor)  This article was written by Scott Baldauf.

---

At the border checkpoint, Prakash pulls his truck over to the side of the road, and jumps out to make photocopies of all his documentation — two copies each of his driver's license, his vehicle registration, and a list of the taxable goods on his truck, which consists of one massive hunk of rolled steel.

This isn't an international border. Prakash is just crossing from one Indian state to another, from Haryana to Rajasthan, and he's going to pass through two more state borders before he reaches Bombay two days from now.

"This is a big problem for drivers," complains Prakash, as he pays for photocopies at a small push-cart stall run by car battery. "This checkpoint usually takes about one and a half hours. Others take three hours or more because of the long lines."

He wipes his forehead, and looks at his watch. "You have to pay toll fees, taxes to the state. Sometimes, if the police want a bribe, you pay that, too."

On paper, India is an economic power, with vast natural resources and a massive population of talented workers. In reality, India remains a collection of 28 separate states and seven union territories, each with its own rules and regulations, its own tax code, and in many cases, its own separate language and cultural customs. To solve this problem, India may need a free-trade agreement with itself.

"We are one country, so we ought to be one market, but we're not," says Cyrus Guzder, a transportation specialist at the Confederation of Indian Industries, a business lobby group in New Delhi. "We are 28 different countries. We don't have a unified tax system, we don't have a unified transport system, and this hurts the ability of Indian business to grow."

In many respects, the European Union is a more coherent polity.

"India is more complex, larger, and more diverse than all of the European nations put together," says Rajiv Kumar, director of the Indian Council for Research on International Economic Relations in New Delhi.

"Fifty percent of the cost of any product is freight charges, so it's a huge cost," says Mr. Kumar. "So if you remove that cost, for the first time, the advantages of the size of the Indian economy will come through."

Truck Traffic A Sign Of Economic Boom

India's phenomenal growth since the economic reforms of 1991 is best seen in the millions of trucks that ply the Indian highway system, carrying agricultural produce to cities, cloth to textile mills, and raw materials to the 129,000 factories spread across the country.

Valued at $20 billion, the transport sector dwarfs the Indian telecom industry, which gets much more notice both at home and abroad. But making transportation more efficient will not be easy. Ninety-five percent of India's trucks belong to small-time operators, with just one or two trucks per owner, a phenomenon that keeps most truckers thinking only for themselves, rather than of their common interest in reducing regulations and taxation.

Six Different Taxes On One Delivery

One of the larger operators on India's highways is SafeExpress, an express delivery company.

"We can be competitive with the best companies in the world, when it comes to speed," says company chief, Amar Bhalla.