Transport sector, industry slam Karnataka diesel price hike

The Karnataka government’s decision to increase the price of diesel by ₹2 per litre has sparked widespread opposition from lorry operators, logistics companies, private bus owners, and cab drivers.

The Karnataka government announced an increase in sales tax on diesel on Tuesday, raising it from 18.44% to 21.17%. This decision has led to an immediate rise in the price of fuel by ₹2.05 per litre.

Lorry operators and logistics firms have raised concerns over rising operational costs, with B. Channa Reddy, State Lorry Owners’ Association, stating that freight charges will be reviewed within three days.

Meanwhile, the Karnataka Lorry Owners’ Association, supported by independent lorry drivers and petrol pump owners, has called for an indefinite strike from 10 a.m. on Saturday urging the government to hold a State-level meeting to address their concerns.

According to G.R. Shanmugappa, president of the Federation of Karnataka State Lorry Owners and Agents’ Association, the diesel hike will lead to daily losses of ₹800 per lorry and monthly losses of around ₹24,000. He noted that the increase would hit foodgrain transportation and long-haul routes particularly hard.

“Every day, 40,000 lorries pass through Karnataka from Tamil Nadu, Kerala, Maharashtra, and Gujarat, while around a lakh travel outside the State. Additionally, 6 lakh lorries operate within Karnataka. This increase will raise the running cost per kilometre, making business difficult,” he said.

Lorry drivers, already struggling with rising costs, expressed their frustration. Gunashekhar, a driver operating between Karnataka and Tamil Nadu, said that his contract-based transport business, covering 450 to 500 km daily and consuming 140 litres of diesel, would face severe losses. “We work on a fixed rate of ₹2.6 per km. With this hike, I will lose ₹3,000 per day, and my additional fuel expenses will go up by ₹500 to 600,” he lamented.

Impact on smaller vehicles and the hospitality industry

The transport sector as a whole is feeling the strain, with even smaller vehicles like cab and taxis affected. K. Radhakrishna Holla, president of the Karnataka Transport Association, pointed out that vehicle taxes have also changed, with smaller vehicles now subject to a 5% lifetime tax.

“This impacts the goods sector economy and the hospitality industry. Additionally, vehicles from neighbouring States like Tamil Nadu, Kerala, and Telangana are avoiding refuelling in Karnataka due to the price hike, affecting local fuel station revenues,” he said.

Nataraj Sharma, president of the Private Bus Owners’ Association, said the increase in road tax would have a severe impact on private bus operators and manufacturers. “Drivers’ salaries will be cut, making it difficult for them to manage their monthly expenses and support their families,” he said.

Cab drivers struggle, fares unlikely to increase

The price hike has also had a significant impact on the cab industry, with many drivers struggling to stay afloat.

Tanvir Pasha, president of the Ola and Uber Association, highlighted that the number of cabs in Bengaluru has dropped drastically from 1.4 lakh to just 40,000 owing to losses incurred by drivers. “Many drivers are selling their vehicles as they can’t afford the costs. Traffic congestion has worsened, with trips that earlier took a few minutes now stretching to an hour, reducing drivers’ daily earnings further,” he said.

Despite the increase in diesel prices, cab fares are unlikely to be revised, leaving drivers in a precarious financial situation. “A driver earns ₹4,000 per day, but ₹2,000 goes toward fuel expenses. After accounting for commissions, loan payments, and maintenance costs, they are left with just ₹500 per day. Now, even that amount is expected to drop to ₹200 to 300,” Mr. Pasha added.

Diesel hike to push vegetable prices higher

The diesel price hike is also expected to drive up vegetable prices in Bengaluru, as traders will have to pay higher transport costs.

Ravi Shankar, an onion merchant and secretary of the Onion Merchants’ Association of Bengaluru, warned that transport charges for bringing vegetables into the city could rise by ₹2,000 to ₹3,000 per load, roughly a 5% increase. “When this happens, traders will pass on the cost to customers to maintain their profits,” he said.

Karnataka Small Scale Industries Association (KASSIA) president M.G. Rajagopal also said the surge in diesel prices has severely impacted small-scale industries (SSIs) across the State, leading to increased operational costs, reduced profit margins, and potential job losses.

“Small-scale industries rely heavily on diesel for transportation, manufacturing, and power backup solutions. With the price of diesel witnessing a steep increase, businesses are finding it increasingly difficult to manage production costs. Many small enterprises operate on thin margins, and the rising fuel expenses are threatening their viability. The situation is further exacerbated by supply chain disruptions, inflationary pressures, and rising raw material costs,” he added.