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FASTag deadline approaches: Unorganised Trucking Sector braces for impact

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The National Highway Authority of India (NHAI) under its ‘Digital India’ initiative has implemented Electronic Toll Collection (ETC) system with FASTag as its brand name, in order to promote digital transaction and making toll payment/collection more efficient and hassle-free task.

FASTag, which was initially optional and set up as a pilot project in 2014 on selected highways, has a new deadline for all vehicles plying on National Highways from December 1. Now, all hybrid lanes at toll plazas across India will be converted into FASTag lanes.  

In order to enforce the new rules, the government is preparing to enforce penalties. Those who enter a FASTag lane at the toll plaza without a valid FASTag will be charged double the toll amount. 

The new electronic toll collection system will deploy Radio Frequency Identification (RFID) technology which will automatically read the multi-layered chip tag from the windscreen of a vehicle and will directly deduct payment from users’ account. This will eliminate the need to stop for toll payments making the movement of vehicles smoother and faster.

However, the question that looms large is how this move will impact the unorganised trucking sector. Is the sector ready for this sudden shift in toll collection? Logistics Insider explores the early hurdles and perks felt by the trucking sector on the implementation of the electronic toll collection system ‘FASTag.’

Post demonetisation, many trucking companies voluntarily shifted to FASTag system due to momentary cash crisis which had erupted soon after ceasing of old currency notes of INR 500 and INR 1000.   

According to NHAI, 1,00,960 FASTags alone were issued in December 2016 out of 2,12,195 issued till Jan 2017 from April 2016 (for both commercial and private vehicles).

And, now when the adaption of FASTag has become mandatory, the trucking sector has no way out but to deal with the transformation.

In India, the trucking sector is highly fragmented. Approximately 95% of truck owners own a fleet of fewer than 20 trucks in the Indian trucking sector. And, at such a small scale, the truck owners generally have very limited knowledge of making the investment in technology.  

Although with the implementation of FASTag along with E-way Bill and GST, the union government has taken steps in restructuring the trucking sector, there are still a few gaps that need to be filled.

Mahindra Arya, President, All India Transporters Welfare Association (AITWA) told Logistics Insider, “The trucking sector is segmented into the organised and unorganised structure. Out of which, it is only the unorganised sector which are facing problems as they are unaware of the latest technology and the process of implementing it”

He believes the government’s efforts fell short in reaching out to the majority of the unorganised trucking sector, making the smoother adaption a bit difficult thing to achieve.  

Where FASTag is lagging behind?

The main challenge experienced by the sector was regarding adaptation rather than preparedness. However, even after the implementation and adaptation of FASTag by the organised trucking sector, there was not much improvement seen in the turn-around time or cost.

Anjani Mandal, CEO and Co-Founder, Fortigo Network Logistics says, “The technology itself works – in fact, works well – and is now stabilized as well after the glitches of the first few months like double charges, purposeful tampering to create an opportunity for graft, and negative & uneven customer experience at toll booths, resulting in high wait times.”

The government’s vision of digitalisation of the toll booth for better customer experience failed due to the inefficiency of the technology used.

Mr Arya points out, “In the US one could cross the RFID enabled tolls with a speed of 100-120 KM/hr. While in India the RFID systems are still failing to identify the chip and debit money due to which the fuzz on the toll plazas are still not completely eliminated.”

FASTag can check the annual whopping loss of INR 12,000 crore  

Despite the hiccups, the implementation of the FASTag will turn beneficial to the sector in many ways. According to a report by BullEye Technologies, India would save INR 12,000 crore every year in terms of fuel and man-hours after 100% switch to FASTag-based toll collection system on national highways.

The report estimates, out of the loss of INR 12,000 crores, 35% is lost due to burning of excess fuel, 55% is lost on account of wasted manpower and 10% on carbon emission.

The FASTag system with the validity of 5 years will provide the users with emergency roadside assistance, accidental death cover and SMS &email alert of transactions.

Mr Mandal believes, that this will substantially reduce, if not eliminate, the highway harassments of drivers by regulatory bodies, and reduce delivery times with elimination of on-route hold-up by over 15 regulatory bodies that are authorized to check a goods-carrying vehicle.

Apart from this the FASTag will also increase transparency & visibility, and will unclog bottlenecks resulting in reduced pollution.

Mr Arya concludes by saying, “If the government is able to pull it off smoothly, then it has a lot to offer to the sector and will create a win-win situation.”

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