Govt red-flags auto companies' recall policy

If the auto industry had its way, companies would pay no penalty when a car is recalled for generic defects and such a recall may not be mandatory even. A senior official said the government is set to red-flag the proposed guidelines drawn up by the auto industry lobby, which is "voluntary" and bereft of penalties at the same time.

A high-level meeting later this month, to be attended by various ministries involving the auto sector, is likely to discuss a structured, and statutory, policy for car recalls. The Society of Indian Automobile Manufacturers (SIAM) will unveil its voluntary code on Monday.

SIAM's code will not impose any penalties on car companies, even in case of known violations. Rather it would "expect" members (car companies) to voluntarily declare generic defects if any. This is in contrast to the regime prevalent in countries such as the United States, Japan and South Korea, which have strict regulations on recalls and specialized bodies looking into them. Toyota, for instance, faced the heat from the National Highway Traffic Safety Administration of the US in 2010 over unintended acceleration in its cars, forcing the Japanese maker to recall around four million vehicles. "This (SIAM's move) will serve no purpose as it has often been found that companies are not open to admitting faults when it is based on self-regulation," an official said. Also Read: Car makers to set recall code for defective vehicles in India

The government's fears on a lax recall policy - when it is voluntary and self-regulated - are not unfounded. While strict regulations have made car recalls a healthy practice in the west, where companies call back vehicles whenever the defects are generic in nature and potentially harmful for drivers, the same is not the case in India.

For instance, in 2010, Maruti Suzuki announced the recall of one lakh units of the A-Star mini car, but only after the Indian media picked up news of a similar move in Europe where the cars had been exported.

The government had earlier tried to deal with vehicle safety issues in the National Road Safety and Traffic Management Board Bill, 2010. The Bill has not been able to move forward after the parliamentary standing committee headed by Sitaram Yechury rejected the proposals and recommended that the government come out with a "comprehensive legislation" that addresses the entire gamut of issues related to road safety. The Bill did not address the issue of vehicle recalls, but only recommended a fine of Rs 10 lakh on a manufacturer in case of a faulty vehicle.

The Indian Foundation of Transport Research and Training (IFTRT), an independent agency working on the transport sector, said statutory backing was imperative to have compulsory automobile and tyre recall rules. The IFTRT, which was also called by the standing committee while deliberating the 2010 Bill, said SIAM is trying to bypass a statutory law through its voluntary code. "The SIAM exercise at this juncture could at best be a disguised marketing effort and an attempt to deflect the pressure of setting up compulsory auto recall rules by the government," said S P Singh, senior fellow at IFTRT.