INDIA BUSINESS WORLD - APRIL - MAY 2007
The Month that was ...

NEW BILL TO REPEAL THE CARRIERS ACT, 1865

THE Cabinet approval to repeal the Carriers Act, 1865 has the potential to drive small (or fly-by-night) transporters out of business.

Chittranjan Dass, vice-president, All India Federation of Goods Vehicle Owners Association, said: "The Cabinet approval is a welcome step for all goods vehicle owners. The Carriage by Road Bill will address issues of liability and accountability in the transport sector."

A Bill to repeal the Carriers Act of 1865 and to enact the Carriage by Road Act, 2005, was introduced in the Rajya Sabha on December 7, 2005 and approved by the Union Cabinet on April 19, 2007. Earlier, the Carriers Act, 1865, regulated the liability of carriers. The Bill had fixed Rs 10,000 penalty in the event of loss, but the amended Bill has done away from imposing any such limit.

The Carriers Act, 1865, also enabled common carriers to limit the liability for the loss or damage to property delivered to them. It also enabled them to declare their liability for the loss or damages to such property. The carriers will now be responsible for the entire value of the cargo.

The consignor will have to prepare a forwarding note giving details of the value and volume of the cargo while booking it. Anil Syal, vice-president, marketing, Safexpress, said: "The smaller carriers, who earlier were able to go scot-free, in case of any breakage, will now come under the scanner."

"With the new Bill the cost of operations of carriers are bound to go up. Earlier, almost 90% of the liability of carriers was escapable. Now, this will not be possible. It will push up the costs of operations as increased liabilities are directly related to costs," said Mr. Syal. Freight charges, however, are likely to remain stable, at least in the short run. "Whether the market dynamics will allow us to increase our freight charges would be too early to comment," added Mr. Syal.

According to industry estimates, there are more than a lakh road operators in India. "Every driver who owns a truck or has a few trucks at his disposal calls himself a road carrier these days. Some even call themselves logistics operators," said Mr. Syal. This chaff will be separated from the wheat through the compulsory registration process. Mr. Dass believes that the Bill might even invoke small operators to come together and form merged entities. "The Bill may also see various goods vehicle owners coming together. Such merged entities will be able to take on safe transport of high value cargo and higher liabilities," adds Mr. Dass. However, there still seems to be some uncertainty about the final draft that has made its way through the Cabinet. The transporters are yet to ascertain basic details like the benchmarks set for registration amongst other finer details.