Proposed car recall penalty to manufacturers slashed by Indian Government

As per fourth and latest draft of Road Transport and Safety Bill, a penalty of INR 50,000 for manufacturing faulty vehicles and INR 1 lakh for refusing to recall these faulty vehicles is proposed.

Proposed car recall penalty
A car being produced in India.

The government of India has decided to go easier on auto companies in the country and lowered penalties on them for manufacturing defective vehicles. According to the fourth and latest draft issued, penalties will now include INR 50,000 for manufacture of faulty vehicles while refusal to recall them will entail a fine of INR 1 lakh only. This is against the original proposal of fine of INR 5 lakhs for both manufacture and failure to recall. The fact that offenders could face upto 3 months of jail term however remains unchanged.

Vishnu Mathur, director-general of SIAM is however of the opinion that fixing a blanket fine is not fair and that the amount of penalty should depend on the kind and type of vehicle besides take into account the nature of defect. KK Gandhi, executive-director – technical at SIAM also wants more clarity on the safety parts which is not defined in the bill. The bill also states that if an auto company informs the regulator about these defects in any model along with proof and then recalls the same, the company will not face any penalties, while these auto companies will have to compensate the buyers for the vehicle.

Mahindra Scorpio alloys recall
Mahindra XUV500 faulty alloys.

In the past year, a number of companies such as Maruti Suzuki, Mahindra and Ford Motors resorted to recalls of thousands of vehicles to fix various problems right from faulty doors to latches and airbags. A new regulator, The National Road Safety and Vehicle Regulation Authority of India is being set up by the central Government to impose fines on errant auto manufacturers and to take appropriate action against them.

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