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

The document analyzes how structural and regulatory inefficiencies in India's trucking industry, such as poor road quality and toll delays, exacerbate the impact of rising diesel prices. It finds that truck operators are largely 'price takers' unable to pass fuel cost increases to customers due to fierce competition and a dependence on brokers. To mitigate these impacts, the brief recommends short-term interventions like reducing toll waiting times and fixing minimum freight rates, alongside long-term structural reforms including computerized exchange networks and improved fuel efficiency standards.

• Fuel wastage in the Indian trucking industry is driven by several factors: trucks making return trips without cargo (primarily for small operators in Delhi and nearby cities), poor road quality, and significant delays at tollgates. It is estimated that fuel worth between INR100 and INR150 billion (US$1.48 to US$2.77 billion) is wasted annually at highways and check posts.
• Truck operators are generally unable to pass diesel price increases on to customers because they are 'price takers' in a fragmented market. Freight rates are primarily determined by demand and brokers rather than cost considerations, meaning supply-side shocks like fuel price hikes are often not reflected in rates.
• The industry's vulnerability is heightened by a lack of entry and exit barriers, as easy registration and financing allow operators to enter the business without prior knowledge or a significant asset base. Consequently, 80 per cent of truck operators own fewer than five trucks, leaving them unable to achieve economies of scale and heavily dependent on brokers.
• Low fuel efficiency (averaging 3–4 km/litre) significantly increases trip expenses. Improving mileage to 5.5 km/litre could reduce average trip expenses from INR1.09/tonne-km to INR0.92/tonne-km and increase the average contribution margin from 36.95 per cent to 61.31 per cent.
• Toll delays are a major economic burden, with the total annual cost of delay to the Indian economy estimated at INR270 billion (US$5.5 billion) and additional fuel consumption due to delays and reduced speeds estimated at INR600 billion (US$12 billion) per year.

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} }