Bajaj Auto’s managing director Rajiv Bajaj has blamed “over-regulation" for a large part of the trouble that India’s automobile industry is in. In his view, regulatory changes have raised costs and made two-wheelers unaffordable to a sizeable chunk of the potential market. Customers now need to buy insurance upfront for several years, while vehicle makers have to add safety features even to low-cost products and meet strict BSVI emission norms. “The price of owning a two-wheeler for a common man has increased by 30% in 1.5 years," he said, “That is a hard problem. Does the government have the humility to reflect and roll back some of this? Can they absorb some of the hit?"
There is no denying a drop in two-wheeler demand, but to what extent can it be attributed to regulatory impositions? Take the new insurance rules. Granted, these have made vehicles more expensive because two-wheeler buyers now have to purchase five years of insurance straight off, instead of annually. Yet, this applies only to third-party insurance, and in a country of India’s traffic hazards and laxity in policy renewals, it could be argued that such a move is necessary. Bajaj also mentioned anti-lock braking systems (ABS) being made mandatory, even though traffic crawls in most cities. While two-wheeler riders have got by without ABS in the past, they are particularly vulnerable to a mishap in case they skid. Similarly, the poor quality of air that we breathe makes it imperative that emissions are reduced.
Yet, it would have been better had some leeway been granted for vehicle makers to upgrade their products. A phase-by-phase schedule could have been used. Abrupt shifts at a time of economic uncertainty are hard to negotiate. Perhaps a tax cut would help, but we don’t know if the government can afford one.