The government has decided to give auto companies in India some much needed respite by lowering the penalties incurred for manufacturing defective vehicles.

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Late last year, Mahindra had recalled 2300 units of the Scorpio, XUV500 and Xylo

The government of our country has finally decided to go easy on all auto companies that are currently in the Indian market. The proposed penalties incurred for manufacturing defective vehicles and selling them by hiding such information from both the consumers and Indian authorities has been slashed. According to the fourth and latest draft of the Road Transport and Safety Bill, a penalty of Rs. 50,000/- for manufacturing faulty vehicles and Rs. 1 lakh for refusing to recall them has been proposed. This move has been taken in response to the original suggestion of Rs. 5 lakh for both. But one thing that remains unchanged is the jail sentence that one can face for up to three months if found guilty.

A copy of the draft is posted in the ministry of road transport & highways website. The respective bill also proposes a new regulator, National Road Safety and Vehicle Regulation Authority of India, which will have all the power to impose fines on auto manufacturers and the other actions that might be taken. According to the new bill, if a manufacturer in complete awareness of a defect informs the authority with proof, thereby recalling the vehicles will not be fined. But the company will however have to compensate the buyers by either replacing, repairing or returning the full value of the vehicle.

The respective body will be set up once the law takes effect in the country as we do not have a mandatory vehicle recall policy at the moment. In 2012, Society of Indian Automobiles Manufacturers (SIAM) asked its fellow members to follow a voluntary code after which several lakh vehicles have been recalled. Thousands of vehicles have been recalled in the past one year by companies such as Maruti Suzuki, Mahindra and Ford to fix problems such as airbags and faulty door latches. What the bill seeks to do is only make the process official.

This news comes as relief for auto companies, as many fines currently exist for all types of vehicles and faults. Director General of SIAM says that the act should only contain enabling clauses and not specifics, and the amount of penalty should depend on the kind and type of vehicle and defect respectively. The new draft has another clause modified which according to the the earlier version enables a recall if a complaint comes from 100 vehicle owners. This decision will now rest on the proposed national authority. But manufacturers are complaining that this move still lacks enough clarity.

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