Heavy Industry Ministry seeks cap on fine for vehicle recall

The Heavy Industry Ministry has sought key changes in the Draft Road Transport & Safety Bill to make things easier for automobile companies. The draft Bill, floated by the Road Ministry, aims to replace the existing Motor Vehicles Act.

“We have given our views on the draft to the Road Ministry. Our intention is not to put undue pressure on automobile companies or create a conflict between authorities,” a senior Heavy Industry Ministry official told BusinessLine . The Ministry is the administrative authority for the automobile industry.

The first issue is over penalties. The draft prescribes a ₹5 lakh fine per vehicle (the amount may be differentiated on the basis of vehicle size) or imprisonment for three months or both for manufacturing faulty vehicles.

The Ministry feels there should be a ceiling on the total amount, in line with international practices.

“In most developed countries, there is fine of $10,000-15,000 per vehicle with an upper ceiling of $3-$5 million,” he said.

If there is no ceiling, a small auto company or companies making electric vehicles will suffer the most, he said, adding that the fine should be fixed with some rationale. “It could even be a certain percentage of the total turnover,” he suggested.

The second issue raised by the Ministry is on a provision related to the recall of vehicles on the basis of 100 applications. The official said that rather than act upon a certain number of applications, there should be a scientific mechanism and tests by an accredited agency to establish the faults first. Only then should a recall order be issued, he said.

“The fault can also be established through accident data, data from dealers (how many vehicles of a particular make are coming for servicing and how often) and also from market intelligence,” he added.

Three conditions The draft prescribes three conditions for vehicle recall. One of the conditions says a defect in a particular model of motor vehicle should have been reported to the national authority by 100 or more people. The defect should be harmful to drivers or passengers of that model or to other road users, or render that model non-compliant with the provisions of the Act, or render that vehicle model unusable.

The third issue relates to the provision of safety standards to be given by the proposed national authority. “This will overlap and contradict the National Automotive Board (NAB). It should be noted that the NAB is a kind of advisory body whose suggestions would need to be approved by the Government,” the official said, adding that the proposed authority should concentrate on road safety.

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