Maximum Rs 1 cr penalty for auto cos for recalling faulty vehicles

New Delhi: As per a new notification by the Union Transport Ministry, the government will penalise vehicle manufacturers between Rs 10 lakhs to Rs 1 crore for failing to meet testing requirements and mandatory recall under the Central Motor Vehicle Act.

The Society of Indian Automobile Manufacturers had in 2012 drafted a self-regulating code for recalls without any provision for penalties.

These were not accepted by the ministry which has now issued its own rules.

According to these rules, penalties will be levied if vehicles that are not more than seven years old are recalled. Manufacturers will attract a penalty of Rs 1 crore if more than 6 lakh two-wheelers or 1 lakh four-wheelers are recalled.

Recall of vehicles with more than 50 thousand 9 seat capacity and heavy goods vehicles will also attract a penalty of Rs 1 crore.

A notification will be issued soon setting rules stipulating when a recall becomes mandatory. It is being reported that if more than 20 per cent of the units sold in a year report faults by the customers then the recall process must be initiated.

This rule will be different for different categories of vehicles.

The ministry will also set up an online portal where customers can register complaints. Based on the manufacturer will be sent notices and asked to reply within 30 days. A designated agency will then investigate the defective vehicles before ordering a recall.