Home >Industry >Manufacturing >Government may impose fine of `11.40 crore on GM for recalls
On Wednesday, the ministry of road transport and highways and the department of heavy industries had formed a committee to investigate the vehicle testing set-up in the country.  Photo: Bloomberg (Bloomberg)
On Wednesday, the ministry of road transport and highways and the department of heavy industries had formed a committee to investigate the vehicle testing set-up in the country. Photo: Bloomberg
(Bloomberg)

Government may impose fine of `11.40 crore on GM for recalls

This would be first such penalty in India’s auto industry on recalls or fudging of tech specifications

New Delhi: The government may impose a penalty of as much as 11.40 crore on General Motors India Pvt. Ltd over the recall of its Tavera utility vehicle, a top government official said on Friday. This would be the first time such a fine is levied.

“We will push for maximum penalty," said Sanjay Bandopadhyaya, joint secretary, ministry of road transport and highways.

Under the Central Motor Vehicle Act, Bandopadhyaya said the maximum penalty on the first recalled car would be 500 and 1,000 on each subsequent unit.

“So in GM’s case, it will be number of units multiplied by 1,000 less 500 for the first car. That is the maximum penalty under the Motor Vehicle Act," Bandopadhyaya said.

With General Motors recalling 114,000 Taveras on Wednesday, the maximum penalty would be 11.40 crore under this calculation.

This would be the first such penalty in the Indian automobile industry on the issue of recall or fudging of technical specifications.

Previously, Hyundai Motors India Ltd was served a showcause notice for allegedly evading duties worth 266 crore. The country’s largest exporter of cars had said it would challenge this at the appropriate forum, Mint reported on 8 August 2011.

The Indian subsidiary of Detroit-based GM admitted that it found “internal audit revealed inconsistencies in emissions results". Following this, it is understood to have asked as many as 25 executives, including four from the top management team, to leave, Mint reported on Thursday.

On Wednesday, the ministry of road transport and highways and the department of heavy industries had formed a committee to investigate the vehicle testing set-up in the country.

“We expect the committee to take a maximum of two months to submit its report," Bandopadhyaya said.

The government also plans to clean up vehicle testing in the country. This is now conducted by agencies such as the Automotive Research Association of India and the International Centre for Automotive Technology (ICAT).

Since India doesn’t have a formal recall policy, however, the company may not have to pay much of a penalty, said S.P. Singh, senior fellow and coordinator, Indian Foundation of Transport Research and Training.

More important would be the action being taken against the vehicle testing agencies. “Certification is being abused for a long time," Singh said. The government plans to abolish the policy of informing the companies beforehand about random sampling to gauge conformity with norms, said a department of heavy industries official on condition of anonymity.

“There will be a computer-generated procedure for random sampling and transfers of the executives working at these agencies," the official said.

Bandopadhyaya said that his ministry was working on some legislative changes with regard to manufacturing defects.

“At present defects in products are not included in the Motor Vehicle Act. We are now waiting for the Parliament to pass the present amendments. As soon as they go through we’ll bring a new Bill," Bandopadhyaya said. “We are in the process of forming a National Road Safety Board, so homologation, vehicle standards will be a part of the mandate of this board."

He said that the government does not intend to investigate the company.

Bandopadhyaya also said that former employees could be questioned as part of the investigation.

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