Even as the domestic auto market cements its position in the global space, a formal ‘auto recall policy' protecting consumer interest akin to the developed countries may not be forthcoming.
Tasked with updating and modernising the Motor Vehicles Act (MVA), 1988, the Sunder Committee review has avoided suggesting legislation on a formal ‘auto recall policy' and an administrator for the same, say industry experts.
The expert panel has instead recommended “punishment for offences relating to manufacturing of faulty vehicles” through imprisonment of up to three months and/or a fine of up to Rs 1 lakh.
A recall policy would have to be included under the MVA as it is the overarching legislation governing all transport sector activities in the country, including manufacture/design of vehicles, licensing and fines.
“The Expert Committee has ignored the practices adopted by Asian countries like Japan, Korea, etc., that the manufacturer should be responsible for recall of its faulty products and there should be a product liability mechanism in place to bring accountability, responsibility and road safety for manufacturing safe vehicles,” said Mr S.P. Singh, Senior Fellow and Coordinator, Indian Foundation of Transport Research and Training.
A formal policy on vehicle recalls upon investigation and confirmation of manufacturing defects would force vehicle, component and tyre manufacturers to issue a public notice. In the US, the National Highway Traffic Safety Administration does a similar job, while the UK has the Vehicle and Operator Services Agency.
‘Framework needed'
“Our market has matured enough. We clearly need a framework for product recall in this country,” said Mr Yezdi Nagporewalla, Head, Automotive Practice, KPMG India.
Mr S. Sunder, Chairman of the Review Committee and former Secretary, Ministry of Surface Transport, told Business Line that such a regulator could be formed, but it is not a legal provision and thus was not included in the review.
“We're confined to what the law can do but we could have suggested such a policy in our recommendations. However, this is the first time a fine has been suggested, which should act as a trigger and prompt such a recall policy. Ultimately, to become a modern nation, we need such a framework for all consumer goods,” he said.
Maruti for ‘legislation'
Mr R.C. Bhargava, Chairman, Maruti Suzuki, said, “It is perhaps better to have legislation as there are so many companies. I would prefer if the industry develops its own code of conduct on the matter, otherwise the Government would have to protect consumer interest. I support such a move.”
In February last year, Maruti had recalled about one lakh units of the A-Star compact due to a problem in the fuel tank. Last November, Tata Motors had offered a free fix on 70,000 plus units of the Nano following incidents of fire, but abstained from calling it a ‘recall'.
A SIAM official said the domestic market is not mature enough for a recall policy. “Issues which cause problems in vehicles like bad fuel quality, spurious parts, overloading in commercial vehicles — these are beyond the control of manufacturers. But if the Government wants it, we will support it,” said the official.