IndiaTech, an industry body representing start-ups, unicorns, and investors, has sent recommendations to the MoRTH (Ministry of Road Transport and Highways) asking for clarifications on a notification dealing with sale and purchase of pre-owned vehicles, as it believes the notification negatively impacts the sector.

The Ministry of Road Transport and Highways (MoRTH) issued a notification G.S.R 901(E) on December 22, 2022, to promote ease of doing business and transparency in the sale and purchase of registered vehicles through dealers. The notification was brought out to address issues encountered during transfer of a vehicle to the subsequent transferee, disputes in regard to third-party damage liabilities and difficulty in determination of defaulters, among other things. 

Also read: Pre-owned car market to grow 2.5 times in value terms over next 5 years: report

IndiaTech CEO, Rameesh Kailasam, told businessline while the industry wanted such a notification and is happy that the government has brought it, the manner of implementation can become chaotic. “The industry is fully aligned with the necessity to bring in more transparency into this space. However there are certain observations and recommendations, which, if considered, would ensure that the scheme around the legislation would be more effective and practically viable. This would also ensure that the intent of the policy is met whilst ensuring minimum disruption to the industry and addressing current bottlenecks,” IndiaTech said in its recommendations to the ministry. 

If the amendment comes into effect on April 1, 2023, IndiaTech says it will adversely impact the sector by increasing the compliance burden on pre-owned vehicle companies such as CarDekho and Cars24. In addition, the industry body has also pointed out interpretational issues with the notification. 

One of the issues raised by IndiaTech is that the amended rules do not foresee the likely scenario of a dealer selling the vehicle to another dealer. So, the first dealer who purchased the vehicle, will continue to remain the “Deemed Owner,” despite the vehicle being sold to another dealer under a B2B transaction.

Also read: We are seeing a huge uptick in our certified used car business: Vikram Pawah of BMW Group India 

“This may defeat the purpose of the rules, wherein the dealer in possession of the vehicle needs to be made accountable when any accident or any untoward incident may occur. Form 29C needs to be further amended to also include transfer of deemed ownership from one registered dealer to another registered dealer,” Kailasam added. Further, the amended rules require dealers to register trips through Form 29F on the portal.

IndiaTech argues that such a process can become tedious for large-scale dealers who have thousands of cars in their inventory.

“Manually feeding the trip details on Form 29 F on the portal may become a clerically and administratively time consuming exercise. It is recommended that if the ministry can extend an API for necessary integration so that the trip details of large dealers can be on a batch-upload or real-time basis be uploaded on the portal,” the industry body added.

According to IndiaTech’s estimates, there are approximately 30,000 dealers in India who transact in pre-owned cars and multiple studies have estimated the pre-owned car industry to be valued at $50 billion by 2026.

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