Pilgrimage to Baddi - Once Again!

Baddi truck drivers assembled in the hall to celebrate the Drivers Day Utsav, 2014

 

Ramesh Kumar from Greater Noida

Unless one is in the freight movement business, especially in the northern belt, they may be unaware of Baddi in Himachal Pradesh. Yet, it enjoys a "special mention" among the logistics fraternity! Baddi is situated at the foothills of the Himalayas and on the way to Simla. Many would convey that this town, known as a tax shelter to promote industrial development by the central government in 2003 with a ten-year tax holiday, originally belonged to Punjab state. Still, state reorganization pushed it into the lap of Himachal Pradesh. 

Baddi saw large-scale industrialization from 2007. According to Baddi-BarotiwalaNalagarh Industries Association, over 2000 factories set up at an estimated cost of 15,300 cr employs 75000 workers. Several MNCs have their manufacturing plants in this tiny town, 60km from Chandigarh, the nearest airport.

Such industrialization warrants logistics support largely. Therefore, transportation is a crucial element to ensure the smooth functioning of manufacturing by bringing in raw materials/components from outside and ferrying finished goods to the rest of the country. Sensing the business opportunity, particularly in the transportation segment, the locals have formed an association to "control" the fleet deployment by the companies in Baddi. 

Simply put, the Association fixes the freight rates. All local transporters are members of it. Manufacturers have to route their transport requirements through the Association and are barred from entering into any direct contract with transporters/fleet owners individually. The Association daily allot loads to transporters in a unique system. Cartelisation, one may call it. Expectedly, shippers are displeased with this "unionization" but helpless because they are "overcharged" due to the absence of competition. 

The control is so total that the Association, it is believed, does not provide loads to those transporters unregistered with it. Hence, none wants to buy trucks without the Association's blessings. As a result, the supply of vehicles is kept on a leash. Truck manufacturers throng the Association office in Nallagarh seeking their "blessings" to push their wares. 

I was drawn to Baddi because of this "cartelization" tag. Since 2014, I have been visiting this attractive transport hub to understand the pulse and the mood of service seekers and providers. One thing is clear: the Association has prospered beyond belief. Today, they operate from a modern office building with a vast auction hall vis-a-vis what it used to be years ago. Transporters have prospered. At whose cost? Shippers, of course. A competitive environment, like anywhere else, would have slashed the logistics cost of Baddi manufacturers by half, if not more. 

Transporters vie with one another through undercutting freight rates across India. Not in Baddi. Disallowed by the all-powerful Association. But, like in any other segment, the politics-business nexus in Baddi cannot be dismissed. Plus, the vote bank angle. 

So far, transporters have the upper hand over the big boys of manufacturers in Baddi. Not to their liking, of course. With the GST rollout, the tax holiday status was cut short, thus pushing companies into a tight spot. 

Many keep asking: is the Baddi model scalable? Yes and no. It is possible in the industrial estates provided there is unanimity among the transporters. It is possible, provided there is a solid political connection with "vested interest."  The second element can be manageable and readily available. But the transporters' unity is an arduous task. Almost unachievable. Want proof? Look at the shoddy treatment meted out to the transport segment by the government at the federal and state levels. The government is exploiting this "lack of unity" among transporters. 

Precisely, this battle of wits between the two takes me to Baddi regularly. One more time this weekend.