The Impacts of Diesel Price Increases on India’s Trucking Industry

This policy brief examines how diesel price increases affect the Indian trucking industry, identifying structural vulnerabilities such as poor road quality, toll delays, and a lack of bargaining power for small operators. It proposes short-term relief through minimum freight rates and toll reductions, and long-term structural reforms including improved fuel efficiency and computerized exchange networks.

• The Indian trucking industry is highly vulnerable to diesel price increases because fuel costs represent approximately 56 per cent of total operating costs, yet operators are largely 'price takers' unable to pass these costs to customers.
• Structural issues, including a lack of entry barriers and easy financing, have led to a fragmented industry where 80 per cent of operators own fewer than five trucks, making them dependent on brokers and unable to achieve economies of scale.
• Poor infrastructure and regulatory inefficiencies cause significant fuel wastage; specifically, less than 10 per cent of India's road network is considered good quality, and fuel worth between INR100 and INR150 billion is wasted annually at highways and check posts.
• Tollgate delays are a major source of inefficiency, accounting for nearly 50 per cent of delays on average trips. The total annual cost of additional fuel consumption due to these delays and reduced speeds is estimated at INR600 billion (US$12 billion).
• Low fuel efficiency, with most trucks averaging 3–4 km/litre, increases trip expenses. Improving mileage to desired levels could save the economy approximately INR240 billion (US$4.8 billion) per year.
• The document recommends several short-term measures to provide immediate relief, including fixing minimum freight rates, reducing tollgate waiting times, and introducing flexibility in long-term contracts to adjust for fuel cost changes.
• Long-term structural recommendations include establishing computerized exchange networks to reduce broker dependence, improving truck fuel efficiency, and introducing mandatory training and revised financing conditions for operators.

APA

Parikh, J., & Khedkar, G. (2013). The Impacts of Diesel Price Increases on India’s Trucking Industry. International Institute for Sustainable Development. https://www.iisd.org/gsi/sites/default/files/ffs_india_transport_policy_brief.pdf

Chicago

Parikh, Jyoti, and Gayatri Khedkar. The Impacts of Diesel Price Increases on India’s Trucking Industry. International Institute for Sustainable Development, 2013. https://www.iisd.org/gsi/sites/default/files/ffs_india_transport_policy_brief.pdf.

Wikipedia

{{cite report |last1=Parikh |first1=Jyoti |last2=Khedkar |first2=Gayatri |title=The Impacts of Diesel Price Increases on India’s Trucking Industry |publisher=International Institute for Sustainable Development |date=October 2013 |url=https://www.iisd.org/gsi/sites/default/files/ffs_india_transport_policy_brief.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{parikh2013impacts, author = {Parikh, Jyoti and Khedkar, Gayatri}, title = {{The Impacts of Diesel Price Increases on India’s Trucking Industry}}, institution = {International Institute for Sustainable Development}, year = {2013}, month = oct, url = {https://www.iisd.org/gsi/sites/default/files/ffs_india_transport_policy_brief.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }