Defective vehicle recalls may be mandatory from 1 Oct

Automobile companies in India that don't recall vehicles despite having clear evidence of safety defects may face penalties starting 1 October, according to rules in the making.

Also on the cards is a government-appointed nodal agency that could launch its own investigation into safety issues and even recommend the government to order a recall, reports The Economic Times.

India has no mandatory vehicle recall policy, unlike in developed markets like Europe, Japan and the US. Local automakers follow a voluntary code of recall adopted by the industry in July 2012, and have since recalled about 2 million vehicles to fix seat belt tensioners, air bags and problems with brake systems. But transportation experts and consumers rue lack of government norms to make it compulsory for firms to act.

The new proposals say the nodal agency shall monitor the recall process and audit the records, the report says.

The government could order manufacturers to recall vehicles if a certain percentage of buyers complain of a safety defect, according to a draft of amendments proposed to the Central Motor Vehicle Rules, 1989. These provisions could kick in from October, says the draft.

The step to frame the rules comes on a push from the Prime Minister's Office.

The government is working on introducing the Road Transport and Safety Bill, 2015, in the next session of Parliament. Prime Minister Narendra Modi in May told ministers to draft rules simultaneously with any proposed Act to cut down on the implementation time. Usually, details are worked on after the law is enacted, causing a delay in the actual implementation of new rules.

The Road Transport and Safety Bill has stringent provisions to deal with safety issues. Road Transport and Highways Minister Nitin Gadkari had said last month its non-passage was his "biggest regret", as more people are getting killed every year in road accidents than in "wars, terror attacks or epidemics".

Carmakers happy
K K Gandhi, executive-director at the Society of Indian Automobile Manufacturers, confirmed receipt of a notification on draft rules to ET and said the industry body is in the process of examining the details. "Since we have a voluntary policy in place already, October deadline should not pose much of a problem. But we have to study the fine-print first," he said.

A spokesperson at Maruti Suzuki welcomed the move. "We are yet to get into details but in principle, it is a positive and proactive step in favour of the consumer," he said.

The draft lays out process for vehicle recalls. Manufacturers will give at least four months for customers to take their vehicles for repair after recall notice is put out but they should also be open to entertaining customers for three years after the first recall announcement. The possible defects may include malfunction of steering components, brake system, fuel system, wheels or seat belt, seats and the head restraint mechanism.

Nodal agency
The draft proposes to insert a provision in the Central Motor Vehicle Rules to set up the nodal agency, which will be appointed or designated by the Centre. This agency will monitor customer feedback or complaints, accident data or any specific situation related to safety defects. If it finds a significant number of "genuine safety defects", it should share it with the concerned manufacturers for further investigation, the draft says.

"Based on investigation, the concerned manufacturer shall decide need for recall." The nodal agency can also initiate its own investigation if it is not satisfied with findings of the manufacturer.

Draft rules propose penalties for manufacturers if they don't act on information they have, but doesn't specify details.

"No penalty shall be levied in a case where the manufacturer voluntarily declares and undertakes a safety recall with due diligence. If the manufacturer fails to announce a safety recall where clear evidence is available as per the recall definitions, the Central government may issue appropriate directions and also impose appropriate penalty as per provisions of the Motor Vehicles Act, 1988 and the Central Motor Vehicles Rules, 1989," it says.

Any dispute between the nodal agency and a manufacturer shall be referred to the Centre for a final decision. The agency will have to be informed within 7 days of a recall exercise being initiated. It shall create a database of safety recalls.