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HomeFeaturesHimachal’s truck cartels are destroying its economy. Adani to Cremica, all want...

Himachal’s truck cartels are destroying its economy. Adani to Cremica, all want out

At least 43 industrial units have shut operations in the last 3 years. The highest shutdowns were in Sirmaur’s Kala Amb area, where 35 businesses closed shop.

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It is not always easy to do business in Himachal Pradesh. And Cremica’s Rajni Bector knows that. For a decade now her biscuit, bread, and condiments company has run on the back of an uneasy but losing truce with the state’s formidable truck unions – high freight charges and iron-grip monopoly. Finally, she gave up, pulled the shutters down, and shifted to Punjab.

“The freight rates in Himachal are very high compared to neighbouring states, and the truck unions here do not allow vehicles from other states to load goods,” said a senior executive director at Cremica. The firm shifted from Tahliwal in Himachal Pradesh to Rajpura in Punjab two years ago, at the peak of the Covid-19 pandemic.

Cremica is not the only company that faced trucker trouble in Himachal Pradesh. As many as 43 industrial units have shut operations in the last three years. The highest shutdowns were in Sirmaur’s Kala Amb area, where 35 businesses closed shop. Then two companies in Una, two in Baddi and Solan and one in Shimla and Kangra terminated operations in the state. Between 2015-2018, the total number of shutdowns was 118.

Industry association members say this figure is even higher. Truck unions are the biggest barrier to Himachal Pradesh’s Ease of Doing Business. They operate with impunity, run their business like a cartel, impose heavy freight charges and intimidate industrialists with their monopoly.  They also wield political power but don’t allow any political party to unionise.

High freight rates are driving business out of Himachal | Photo: Krishan Murari | ThePrint
High freight rates are driving business out of Himachal | Photo: Krishan Murari | ThePrint

“Sometimes more money is spent to truck goods from Himachal than it takes to transport goods from Mumbai to Dubai,” says Bhavdeep Sardana, CEO of Sukhjit Agro Industries—a starch, dextrose and glucose manufacturer based out of Una.

For Himachal industries, the litany of woes runs over. On top of the truck cartels and intimidatory work culture, businesses say the state government also levies an Additional Goods Tax (AGT), apart from the Goods and Services Tax (GST) already mandated by the Centre. The unions are also short of containers, causing a delay in transportation.

Nalagarh Truck Union is Asia's largest truck union with 10,000 truckers | Photo: Krishan Murari | The Print
Nalagarh Truck Union is Asia’s largest truck union with 10,000 truckers | Photo: Krishan Murari | The Print

Despite the rising anger, the truckers’ unions appear to be in no mood to change their ‘my-way-or-the-highway’ attitude.

“We are the biggest truck union in Asia, and we are running it our way,” said Nalagarh Truck Union General Secretary Jagdish Chandra with pride. “We decide the rate by sitting with the industry.”

Also read: Una’s bulk drug park is the ‘next Bhakra Nangal’. And it’s BJP’s trump card in Himachal polls

Cartels and blackmail reign supreme

Three days after the new Congress government took oath in Himachal Pradesh, Adani Group closed two cement plants in Darlaghat and Bilaspur on 14 December. They couldn’t deal with unreasonable and high-handed truckers anymore. And the industry stood firmly behind the conglomerate. The decision has stirred the bitter and grudging status quo between truck unions and businesses in Himachal.

Ambuja Cement plant in Rauri Village of Darlaghat, Solan. Adani shut the plant on 14 December | Photo: Krishan Murari | The Print
Ambuja Cement plant in Rauri Village of Darlaghat, Solan. Adani shut the plant on 14 December | Photo: Krishan Murari | The Print

Himachal Confederation of Indian Industry Chairman Subodh Gupta wrote to Chief Minister Sukhwinder Singh Sukhu, saying the transport union system is cartelised and exorbitant. He said that the cement and other industries found it difficult to conduct operations in the state. CII then urged Sukhu to disband the truck unions in its letter to the CM.

Himachal Pradesh relies heavily on trucking businesses because railway cargo cannot function on its narrow, winding roads. Truck unions are now a dreadful reality in the hill state, and no industry can function without them.

“When an investor comes here, they don’t know about the monopoly of truck unions. They build their business infrastructure and find out about it later,” says the Kala Amb Industry Association president, Pramod Sharma.

“We will not allow vehicles coming from outside to load goods here. We will set their vehicles on fire. Only local people should get benefits here,” warns Chandra.

It’s not just factories and production units that are squirming under the grip of truckers’ unions.  Apple growers in the state claim they are facing losses due to high freight charges. According to Harish Chauhan, president of Himachal Pradesh’s Fruit, Vegetables and Flower Growers’ Association, apples are transported by weight in the rest of India.

“But here, it is done according to the box of apples. The truck unions in Himachal Pradesh charge Rs 30-40 more [than the standard rates] for each box, which causes direct loss to farmers,” he said.

Even if a transporter comes from outside, he has to wait here because unions give preference to their vehicles. “Our only demand from the government is that the transportation should be done according to the weight, and the government should fix the freight,” says Chauhan.

Governments, however, have proved unwilling to wade into the truckers’ territory.

Also read: The Hattis of Himachal Pradesh are going into elections with ST tag, new hope, old fears

Growing dependence strengthens unions

In Baddi, the largest industrial area of Himachal Pradesh, trucks line up on both sides of roads for miles. Tenders for the much-anticipated rail project were floated in 2007-08, but work is far from complete.

In the absence of a rail network in the industrial town, businesses here are at the mercy of trucks to transport raw materials and finished goods. About 30,000-40,000 families in Baddi are directly connected to the trucking business.

“No truck and transporter is ready to come from outside due to the terror of truck unions. Trucks that come from outside have to go empty. It is not like this anywhere else in India. It happens only in Himachal,” says Rajender Guleria, president of Baddi Barotiwala Nalagarh Industries Association (BBNIA), an umbrella organisation of 2,200 industries. Together, they dispatch Rs 1 lakh crore of finished goods annually via trucks, says Guleria. In fact, Baddi accounts for nearly 65 per cent of the state’s industrial revenue.

BBNIA had even filed a petition in the Himachal High Court in 2020 after the Baddi-Nalagarh Truck Operators Transport Society had allegedly reneged on an agreement with the association to charge a discounted freight rate. There was also an understanding that industries would be allowed to fulfil 30 per cent of their freight requirements with their own trucks.

But in August 2020, the union ended the deal unilaterally, says Guleria, after which BBNIA moved the High Court. In its order, the division bench noted that the practice of blackmailing industrialists and the collection of ‘goonda tax’ had not stopped.  It held officials accountable, noting that they either did not intend to implement orders or that there had been a complete failure of law and order, particularly in Baddi, Barotiwala and Nalagarh.

In July 2021, there was a dispute between a local truck drivers’ union and a plastic goods manufacturing business in Bathu Bathri industrial area in the Tahliwal region. The plastic unit had started using its own trucks, which did not go down well with the union. Truck drivers then gathered outside the Bathu Bathri industrial area factory gates to stage a protest.

Police were called, and finally, the local administration, union leaders and industry representatives reached a ‘compromise’.  But it wasn’t really a compromise. The plastic manufacturing unit could not make its own arrangements to transport raw materials or goods. It could only use union trucks.

Also read: What explains three different outcomes—Delhi to Gujarat to Himachal

The clout of truck unions

Himachal Pradesh has around 25 active truck unions with connections cutting across political lines, be it the Bharatiya Janata Party (BJP), the Congress or the Left parties. Major truck unions operate in all the industrial areas and are especially powerful in Baddi, Parwanoo, Nalagarh, Una, Darlaghat, Bilaspur and Paonta Sahib.

According to the state transport department, Himachal Pradesh has more than 1.92 lakh goods and carriage vehicles. But data from unions put the number of trucks at around 50,000.

Directorate of Transport's office in Shimla | Photo: Krishan Murari | The Print
Directorate of Transport’s office in Shimla | Photo: Krishan Murari | The Print

Clashes in truck unions are not new in the state, not when more than one lakh families are linked to them.

“We are so strong that no one collides with us. All parties are with us,” says Jagdish Chandra.

Even former truck union leaders have considerable clout. Few residents of Darlaghat, in Solan district, want to cross swords with Balak Ram Sharma, a former truck union leader and ex-vice-president of the BJP from the Arki region. His palatial multi-storeyed house near the main road in Darlaghat is a local landmark.

In 2013, Sharma slapped an accountant from the Food and Civil Supplies Corporation when the latter asked him to submit some bills. Sharma was arrested after a complaint was filed.

“Union leaders here have luxurious houses and cars. Their children live in big cities and have properties in many places in the state,” says a resident of Rauri village in Darlaghat.

In a show of strength, Balak Ram Sharma, with other union leaders, hoisted the national flag on Republic Day this year at a ceremony in Darlaghat’s Ambuja Chowk.

Of the eight truck unions in Darlaghat, four have been suspended by the district administration over corruption charges: Baghal Land Loosers (BLL) Society in 2017, Golden Land Loosers (GLL) in 2016, the Ambuja Darlaghat Kashlog Mangu (ADKM) in 2019 and the Mining Society, which was suspended within a year of its formation.

“Most of them are corrupt,” says Ved Prakash Shukla, ex-president of the now-suspended ADKM truck association, who had accused Balak Ram Sharma of bribing ministers and local leaders. A case is currently being heard in the Himachal Pradesh High Court.

For the most part, truck unions operate with impunity while industries and business owners bemoan the ‘goonda raj’. In the Baddi-Barotiwala-Nalagarh (BBN) industrial areas, trucks smuggle marijuana and poppy husk.

Last year, industrial associations alleged that truck unions had set up illegal check posts and stopped the personal vehicles of industrialists. But so far, the state police have registered only eight cases against them, including two related to extortion.

“In 2004, the people of the truck union beat up the secretary of our association,” says Satish Goel, president of Himachal Chambers of Commerce and Industries, Paonta Sahib. He, too, had approached the High Court, but ultimately, it was a series of ‘peace talks’ between the union and the industry that led to a measure of understanding between the warring parties. A ‘beech ka rasta’ or ‘middle path’ was found, where truckers agreed to lower their freight charges.

“Since then, work has been going on smoothly in our area,” says Goel, “but it is a fragile peace.”

Also read: A glut, low prices & high costs — why Himachal’s apple farmers are a bitter lot as polls near

Businesses have fought for long

For years, industrial associations across the state have been urging successive governments to break the stranglehold of unions in the region, but their complaints have fallen on deaf ears.

As recently as 1 February, after meeting with a delegation of union representatives, CM Sukhu announced that his government would not tolerate the exploitation of truckers. 

But the protection may come at a cost that Himachal Pradesh cannot afford.

Recent data from the Centre for Monitoring Indian Economy shows that, as of 2022, Himachal Pradesh is the fourth state with the highest unemployment rate of nearly 9.2 per cent.

To set up new industries in Himachal, the erstwhile BJP state government held meetings with potential investors not just from India but other countries. Memorandums of Understanding (MoUs) worth Rs 1.25 lakh crore were signed in the state during BJP’s tenure.  However, so far, only about Rs 13,000 crore (10 per cent) of these investments have been directed toward the state. Existing industries have made maximum investments under the expansion mode of their units.

Truck unions justify their freight rates by citing rising fuel prices, taxes, and the harsh terrain of Himachal Pradesh. But industrial associations argue they cannot afford these sky-high prices. Delays in GST refunds exacerbate growing operational costs. “And we also pay AGT here,” says CS Kapoor, general secretary of the Una Industry Association.

It’s not that successive governments have completely ignored the high freight charges set by unions. In 2005, a Permanent Standing Committee was set up to evaluate freight rates and look into demands to open a tendering process for the same.

Adani Group’s decision to close the cement plants within three months of acquiring them in September 2022 has spurred the government into action. A week after the closures, it set up a sub-committee to investigate the matter. It then tasked Himachal Consultancy Organization Ltd (HIMCON), a state-owned agency, to calculate the freight rates based on a formula proposed by the High Court.

Ambuja cement plant in Darlaghat | Photo: Krishan Murari | The Print
Ambuja cement plant in Darlaghat | Photo: Krishan Murari | The Print

“We want it to be resolved soon, but we can’t decide on this sitting in a room,” says IAS officer Anupam Kashyap, directorate of transportation, Himachal Pradesh and a member of the sub-committee.

Kashyap admits that reaching a compromise everyone will accept will be an uphill task. “This is a big test for us,” he says.

It’s not that other states, like neighbouring Punjab, don’t have problems with truck unions forming cartels. In 2017, the Captain Amarinder Singh-led Congress government banned truck unions in the state. But one of the Aam Admi Party (AAP)’s election promises was to reinstate unions, which hasn’t been fulfilled by CM Bhagwant Mann yet. Recently, Punjab truck operators blocked the roads in an indefinite strike and only called off the protest in the first week of January after the state government formed a committee to investigate their concerns.

Himachal’s Industries Minister, Harshvardhan Chauhan, is under pressure to improve the state’s finances, which he said were not good.

“Truck operators are a big problem, but we have to take both the industry and the union together,” he told ThePrint.

Chauhan claims that “efforts are on” to end the logjam between truck unions and industry operators.  “The chief minister himself is also looking into this matter. But the government can only play the role of a mediator,” he said while promising to address the GST-related issues raised by industries.

“Those who have given their land for industries, their interests are also involved. We are answerable to the people of Himachal,” he said.

The government is also trying to increase the land bank to attract industries and investment in the state. Section 118 of the H.P. Tenancy and Land Reforms Act 1972—which restricts land transfer to non-residents—has also been a big investment hurdle for the government. But Chauhan insists that they are actively working toward making the whole process easier.

All these incentives will come to nothing if the unions’ grip on freight is not loosened. And the government is walking a very fine line: It cannot afford to alienate its vote bank but is desperate to attract investors.

Also read: Is Shimla story over? Bengaluru-like jams, no water, collapsing buildings, swelling crowds

Himachal government under pressure

For all the talk of mediation, little has changed on the ground. The situation in Darlaghat, where one of the cement factories acquired by Adani Group used to operate, is tense. Hundreds of trucks are parked idly on narrow roads.

On 10 January, transporters allegedly stopped the vehicle of Hoshyar Singh, an industrialist and Independent MLA from Dehra, for his anti-union remarks. Singh, who has units manufacturing precision engineering parts in the Una district, is reportedly thinking about shutting them down due to recurring losses made worse by high freight charges.

Gagret Truck Union president Satish Gogi, however, is insistent that Singh apologise. “Or else our truck operators will not treat him well and will blacken his face,” he said.

No government has ever tried to end the truck unions. People from all parties are sitting in it, Hoshyar Singh says.

The Adani cement fiasco has left the state government squirming. A high-ranking source in the Sukhu cabinet revealed that the Himachal government is facing a loss of more than Rs 1 crore daily due to the closure of Adani’s cement plants.

Adani Group had offered Rs 6 per tonne per km (PTPK) against the existing rate of Rs 10.58 PTPK for the unit in Darlaghat. But unions rejected the rate, saying it was “not viable.” They say they have not increased freight charges since 2019, even though diesel prices have increased continuously.

“These unions not only decide the rates and deployment of trucks but also whose material should be transported and even the destination for each truck,” wrote Ajay Kapoor, CEO of Adani Cement (ACC and Ambuja), in his letter to the Permanent Standing Committee of Himachal Pradesh.

Meanwhile, businesses around the plant at Darlaghat have come to a standstill. Shops are closed, and streets are deserted by 7 pm. Renu Sharma, who runs a tea shop in Darlaghat, has seen her earnings drop by 80 per cent since the cement plant closed.

“Shops used to buzz with activity till late at night. Ever since the plant closed, trucks no longer pass through here,” she said.

Truck drivers are already feeling the loss of pay. Thousands of trucks have been parked outside the cement plants at Darlaghat and Bilaspur for more than 50 days since the factories closed. Several truck unions had initially called for a chakka jam for 4 February, which they postponed after meeting CM Sukhu on 3 February.

They don’t want to compromise on freight rates.  But they want the billionaire back.

(Edited by Zoya Bhatti)

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