The association has now called for immediate and coordinated intervention by both State and Central governments to mitigate the economic impact.
| Photo Credit: ALLEN EGENUSE J.
The West Asia crisis, coupled with a rise in fuel prices, are exerting significant pressure on multiple sectors in the State, including transport, logistics, agriculture, MSMEs, tourism, hospitality, and services, according to the Karnataka State Travels Owners’ Association.
The association has now called for immediate and coordinated intervention by both State and Central governments to mitigate the economic impact.
K. Radhakrishna Holla, president of the association and director of the Federation of Karnataka Chambers of Commerce and Industry, highlighted the cascading effects of rising fuel costs. He said that the State government earns approximately ₹23,000 crore to ₹24,000 crore annually through VAT and sales tax on petrol and diesel, with the current petrol VAT rate standing at nearly 29.84%.
“While fuel taxation remains a major revenue source, the continuous price increase is driving up transportation costs, production expenses, and overall market prices, thereby impacting both businesses and consumers,” he said.
Mr. Holla also pointed out to discussions in certain banks regarding the introduction of a new ECLGS 5.0 scheme aimed at supporting financially disciplined borrowers. He described this as a positive development and urged both public and private sector banks to introduce similar relief measures without delay.
Expressing concern over the possibility of further escalation in West Asia conflicts, he warned that any spike in global crude oil prices could deepen the economic strain. “Precautionary policy measures are essential to safeguard small businesses, the transport sector, agriculture, tourism, and industries from a potential downturn,” he added.
Among the key recommendations, the industry body has urged the government to bear ESI and PF contributions for at least three months to protect employment, introduce simplified tax relief mechanisms for MSMEs, and enhance working capital and liquidity support through banks.
Additionally, it has called for temporary exemptions or concessions in national highway toll charges, reduction or waiver of parking and amenity charges at tourist destinations, and temporary relief in State fuel taxes.
Mr. Holla also emphasised the need for continuous monitoring of fuel price trends and supply chain disruptions, along with regular consultations between governments and industry bodies. Highlighting infrastructure needs, the association president stressed the importance of developing modern wayside amenities across national and State highways through coordinated efforts.
Published – May 28, 2026 06:23 pm IST
