Transport Minister Nitin Jairam Gadkari’s assertion on Tuesday about making it mandatory for even small cars to have six airbags sent the auto industry in a tailspin.
Gadkari simultaneously made another critical announcement that there will be a distance of minimum 60km between any two toll gates on the national highways from now on, giving much sought relief to freight movers. However, this is an existing rule under National Highways Fee (Determination of Rates and Collection) Rules 2008 that underline the distance between any two toll gates on national highways to be 60 km.
“There is a rule that no two tolls should be there within sixty kilometres but it is still there in some places. Today, I promise to this House that this is illegal and within three months, there will be only toll within a distance of 60 kilometres and if there is another one, it will be shut,” said Gadkari.
On the contentious issue of six airbags, the Minister flagged safety concerns. Gadkari told Parliament that India has one of the highest road accidents in the world with five lakh accidents in a year, 1.5 lakh people die and around three-lakh people become physically handicapped, and that it is time India adopts better safety norms – both for pedestrians as well as vehicles. The six airbags, said the Minister, should mandatorily be part of the enhanced safety regimen.
Auto industry stunned
The auto industry already reeling under stress due to semiconductor chip shortage and rise in commodity prices, was stunned by the Minister’s statement with regard to the six airbags rule..
“This will reduce sales of small cars. We are still below our peak which was in 2018-19...the peak sales were three years earlier. Two of these years were Covid years and one year was not even the Covid year (2019-20), but sales fell 18 per cent. We haven’t even reached there yet...so it really means three years are lost,” RC Bhargava, Chairman, Maruti Suzuki India (MSIL) told BusinessLine.
“And, the prices just go up because of other reasons like higher prices for materials/ chip shortages, and along with that we have the airbags cost. So, the recovery will get later...the recovery will get push backed,” he added.
MSIL sells the maximum number of small cars in India and has a market share of 88 per cent in the entry segment (Alto, S-Presso), 72 per cent in the mid segment (like WagonR, Celerio) and 58 per cent in premium hatchback segment (like Baleno) in the industry. Overall, it has a market share of 68 per cent in the hatchback segment.
According to industry experts, there could be a cost increase of at least ₹18,000-22,000 (excluding GST) in each car, if six airbags are made mandatory.
Gadkari has, on earlier occasions, said that a draft notification has been passed to make six airbags compulsory in motor vehicles carrying up to eight passengers in India. But his statement on Tuesday included even smaller cars in the ambit of vehicles which mandatorily require six airbags.
“The industry got upset because I made six airbags mandatory in economic models...they said cost will increase, but I told let it increase...if a poor man dies let him die and save the rich man, is it? So from now on, any economic model...the smallest of the smallest, even nano model, every car will have six airbags is been made mandatory so that people’s lives are saved,” Gadkari said in the Lok Sabha.
The Ministry had already passed the mandate to make two airbags compulsory in vehicles, including the cheapest in the market and came into force in January this year.