Indian truckers strike over tax

The strike is starting to bite as trucks sit idle

A strike by India's biggest group of truck owners has moved into its third day, as a row over a new tax continues.

About 60% of goods in India are carried by road, so the stoppage has led to fears of goods shortages that could fuel already-high inflation.

Truck owners are demanding that the government withdraw a proposed 10% tax on freight bookings, saying it will hurt their business.

Indian press reports said talks between the two sides might happen on Monday.

The strike co-ordinators, the All India Motor Transport Congress (Aimtc), said nearly 2.5 million trucks were off the road on Monday, the Associated Press news agency reported.

'No reversing'

"We are determined not to pull out of the strike till the government withdraws these new tax proposals," said Aimtc president BN Dhumal.

More truckers are threatening to stop work

Aimtc has threatened to escalate the stoppage if the government does not back down.

"The remaining trucks, like tankers carrying oil, milk, vegetables and medicines will join in from Tuesday if the government doesn't listen to us," said Mr Dhumal.

The Finance Ministry has issued a statement calling for public patience until it is able to explain to the truck operators that the tax on freight bookings does not affect them, only freight agencies.

But the explanation failed to satisfy Aimtc, which argued that the line between freight agencies and truck operators is often blurred, and many of its members will have to pay the tax.

There were signs on Monday that the strike has started to bite, though companies and households have stockpiled supplies.

However, motor scooter maker Bajaj, which exports to the US, said on Monday it was struggling to ship goods from its factories. Shipments were "very close to stoppage," said executive director Sanjiv Bajaj.

Economic angst

"The strike will give rise to inflation and will adversely affect exports, economy and productivity," said the All India Association of Industries.

India's economy is growing strongly, but inflation is causing concern. In the week to 7 August it hit 7.9% - its highest level for three-and-a-half years.

The dispute highlights a broader economic policy dilemma facing the left-leaning government.

It introduced the controversial tax in its 2004/05 budget in an attempt to bolster revenue, which it needs to keep its pledges to the rural poor who swept it into power.