Take product liability cover for long-term contracts with foreign buyers

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We are a group of three young first-generation entrepreneurs. All three of us are management PGs from reputed institutes in Mumbai. We intend to start a logistics transport firm and intend to purchase a small fleet of trucks. Our discussions for an annual contract with a large company based in Pune are already in an advanced stage. However, we are being advised by many people against entering the transport business because of complex laws. We asked the trucking firms about these laws, but could not get a clear picture. Could you please tell us briefly about laws applicable to transport?

—Vivek Lal, Mumbai through email

Your advisors are not very wrong. It is a difficult business to enter, especially if it is to be a maiden initiative, because of the complexity of laws. But considering that the bulk of the transport business is in the informal sector, it surely would not be impossible to operate. First, there is set of laws related to operation of fleet. This covers the road worthiness of vehicles, competence in driving, control of emissions, pollution control certificates, etc and other labour-related laws. The other laws could be classified into those related to location, commodity and taxation. Location-specific laws would encompass borders: national, states; districts; municipal limits; and bridges, and law and order regulations.

These may require permits, specific permissions for movement of goods. There are commodity-specific laws, which become applicable depending upon the classification of a given commodity in other central or state legislation— for example, essential, hazardous, adulterated, licensed, forest, endangered species, etc. Further, there are laws related to taxation such as customs, excise, sales tax/Vat, octroi, entry tax, toll, etc.

Last but not the least, there are local police and flying squads of various departments/ agencies, which may have specific orders for search and seizure. If that does not deter you, there are many states/ districts where movement of goods is impossible without dealing with local mafia/ insurgents/ naxalites! It is said that the free flow of goods, without geographical barriers, is a sine qua non for economic prosperity, nationally as well as internationally. The ground reality of transport in India is quite unpalatable.