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Business News/ Opinion / It’s time to regulate the auto industry

It’s time to regulate the auto industry

The Global NCAP has highlighted that cars made in India are unsafe, and pointed out the casual approach of automakers towards improving quality

The Indian auto lobby group, the Society of Indian Automobile Manufacturers or Siam, held that the crash test results was scare-mongering. Photo: Global NCAPPremium
The Indian auto lobby group, the Society of Indian Automobile Manufacturers or Siam, held that the crash test results was scare-mongering. Photo: Global NCAP

New Delhi: The Global NCAP crash tests of five top Indian models drew heavy criticism from across the industry. Bajaj Auto Ltd managing director Rajiv Bajaj compared the agency’s test results with former French queen Marie Antoinette’s suggestion that those who couldn’t afford bread should have cake.

The Indian auto lobby group, the Society of Indian Automobile Manufacturers or Siam, held that the crash test results was scare-mongering.

But the Global NCAP has not only managed to highlight that cars made in India are unsafe, but has also pointed out the casual approach of automakers towards improving the quality standards of vehicles.

It is worth noting that the same automakers ship out around half a million cars to markets such as Europe, Japan and Australia, which follow the highest levels of vehicle standards.

While the recent mileage controversy in Japan is yet to unfold in India, the fact is India’s auto industry has been found wanting on every pertinent issue ranging from recalls, to emissions and safety standards. Automakers react to changes in regulation instead of anticipating and implementing such moves.

While the Supreme Court’s move to ban sale of sports utility vehicles with engine displacement of 2000cc or above in Delhi-NCR is debatable, the cases of Tavera recall by General Motors and the controversy over Volkswagen’s move to recall vehicles in India leave automakers on a sticky wicket. To be sure, the Volkswagen issue is to do with Nox (oxides of nitrogen which are atmospheric pollutants) and the Supreme Court’s move is influenced by PM 2.5 levels in the city. PM 2.5 are tiny particles in the air that reduce visibility and cause the air to appear hazy when levels are elevated, besides being a health hazard.

These are two different issues but they question Indian automakers’ commitment to bring down the carbon footprint in the country. In fact, the former roads secretary Vijay Chibber had put it simply. In an interview to Mint on 5 January, he had said: “Why are we all so fixated with Volkswagen? VW story is the same for all autos."

Yet, automakers find their ways around such problems as India does not have a clear inspection regime in place yet. The mandatory crash testing norms will only come in place in October 2017 for new models and in October 2019 for existing models; India will leapfrog to BS VI emission levels only in 2020 and the government has declined to have a mandatory vehicle recall policy in place. There is no way automakers could be held guilty in India for over-statement of fuel efficiency like they have been in Japan.

Clearly, the government has done little on its part to improve the situation.

Little has happened since the 2013 Tavera recall, where General Motors admitted to fudging emission data and specifications of its Tavera models and the then government was forced to call it a “corporate fraud".

The Nitin Gokarn Committee that was set up to investigate the recall found GM and its officials guilty. The then government at the Centre directed the Gujarat and Maharashtra governments to form a special investigative team to probe the matter further since the company’s manufacturing facilities were based in these states. As of today, it is not clear if an SIT was even formed and whether GM will face the consequences.

The episode also puts the role of some government-sponsored agencies such as Automotive Research Association of India, Pune, and International Centre for Automotive Testing, Manesar, in question. They sign off Conformation of Production certificate to automakers.

After rounds of criticism in the media for not having a recall policy in place, Siam adopted a so-called Voluntary Auto Recall System, but it refrained from allowing any government agency to penalise the automakers if they were found guilty. On 21 April, Union Minister of State for Heavy Industries and Public Enterprises G.M. Siddheshwara informed the Lok Sabha that the government is not considering a mandatory recall policy for the automakers in the event of defects.

Incidentally, the ministry of road transport and highways in the draft Road Transport and Safety Bill, 2015 had proposed a mandatory recall policy for vehicles, keeping the safety of vehicle users in mind. The draft bill had even proposed that manufacturers should be liable to pay compensation for damage due to crashes caused by manufacturing defect in vehicles. It had also proposed levying penalties on vehicle-makers for non-compliance in notifying manufacturing defects.

To be sure, the automobile industry is one of the few success stories that India has and perhaps the only one in manufacturing. But if it has to keep growing it can’t be allowed to be lax on key parameters like quality, standards and safety regulations that developed markets follow.

Clearly, the Indian government needs to step up and look at the industry minutely. And a sector regulator will only augur well to realise the sector’s potential as the lynchpin of Indian manufacturing.

This will help the sector afford the bread as well as the cake.

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Published: 20 May 2016, 09:37 AM IST
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