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Insights into Editorial: It’s time to regulate the auto industry

Insights into Editorial: It’s time to regulate the auto industry

20 May 2016

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Summary:

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

  • However, the tests are not free from criticisms. They have drawn heavy criticism from across the industry. While some compared the agency’s test results with former French queen Marie Antoinette’s suggestion that those who couldn’t afford bread should have cake, few held that the crash test results was scare-mongering.

Why be concerned about this?

  • The same automakers, who failed in tests, ship out around half a million cars to markets such as Europe, Japan and Australia, which follow the highest levels of vehicle standards. That is to say, crash test results prove safety quotient of Indian cars lower than the same model elsewhere.
  • We also need to be worried because cars which failed in these tests are some of the most famous and highest selling cars in India.

What’s the problem?

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. Also, 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. Besides, there is no way automakers could be held guilty in India for over-statement of fuel efficiency like they have been in Japan.

What needs to be done?

  • Government should penalise the automakers if they are found guilty. A mandatory recall policy for the automakers in the event of defects should be brought in.
  • Manufacturers should be made liable to pay compensation for damage due to crashes caused by manufacturing defect in vehicles.
  • The government should also levy penalties on vehicle-makers for non-compliance in notifying manufacturing defects.
  • No manufacturer anywhere in the world should be developing new models that are sub-standard. Car makers must ensure that their new models pass the UN’s minimum crash test regulations, and support use of an airbag.
  • Finally, it’s really up to the manufacturers to lead from the front and offer the buying public the safest possible vehicles and make them aware about the products and the latest in safety technology that their cars offer.

Way ahead:

Indian automotive market is the sixth largest in the world currently and is poised to become third largest globally by 2020, and there are 196 countries in total. So, we’re a pretty significant lot by that measure. Plainly on that basis, the auto manufacturers should, by default, invest immensely in the Indian automotive landscape — not only on sales and marketing push because of the great scope here, but also from the perspective of global quality products.

Conclusion:

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.