New Delhi: Once the Motor Vehicles (Amendment) Bill, 2016, which is expected to be passed in the Rajya Sabha in this monsoon session, comes into force as an amendment to the Motor Vehicles Act, 1988, car manufacturers could be fined as much as 100 crore if their vehicles are found to be causing harm to the environment or are declared unsafe.

Cleared by the Lok Sabha, the amendments empower the central government to make rules for regulating the recall of motor vehicles for any defect that may cause harm to the environment, driver, occupants or to other road users. India does not have a vehicle recall policy.

Here are 5 things to know about the new recall policy in the Motor Vehicles (Amendment) Bill:

1. When can a vehicle be recalled?

The Motor Vehicles (Amendment) Bill, 2016, seeks an amendment to the Motor Vehicles Act, 1988, to empower the central government with legal rights to ask any automobile manufacturer to withdraw motor vehicles if a fault is found that can damage the environment or hurt people. It brings two-wheelers, cars and commercial vehicles into its ambit.

2. Who can report a vehicle defect?

Vehicles can be recalled if defects are reported to the central government by a certain percentage of vehicle owners, a testing agency or “any other source".

3. What happens after the government orders a recall?

After a vehicle is recalled, the manufacturer has three options: reimburse buyers for the full cost of the motor vehicle, replace the defective vehicle with a new one that meets safety standards, or have it repaired. In case the defect lies in a component, the central government can order a manufacturer to recall all motor vehicles that contain the component.

4. Will the vehicle manufacturer be fined?

Once the Motor Vehicles Act is amended, violations can face penalties running up to 100 crore. There is also a provision of imprisonment for one year. The automobile manufacturer can escape paying the fine by initiating a recall on its own after informing the central government of the defect.

5. How have vehicle recalls been regulated so far?

Vehicle manufacturers are following a voluntary code on vehicle recall formulated by the Society of Indian Automobile Manufacturers (SIAM), in which they replace defective parts. Over 90,000 vehicles have been recalled this year, according to SIAM data. Last year, 80,000 vehicles were recalled while in 2016 the number was 8,42,909, mainly on account of a massive recall by Volkswagen over a global diesel emissions scandal.

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