Motor Vehicle Act Amendment Impact of Car’s Recall

  • Blog|Indian Acts|
  • 2 Min Read
  • By Taxmann
  • |
  • Last Updated on 28 June, 2021
Motor Vehicle Act Amendment 2016:
Motor vehicle Act, 1988 was amended in the year 2016 and passed a law to penalize the car manufacturers for producing defective motor vehicles that can cause harm to the environment or is declared unsafe for any reasons. Under this reform they could be charges a fine up to INR 100 crores. 
It empowers the Central Government to recall the motor vehicles which is found with a defect that may cause harm to environment, driver, any of its occupants or any other road user. Before this Motor Vehicles (Amendment) Bill, 2016, India did not have any vehicle recall policy. It extends to two wheelers, cars, and any other commercial vehicle. Central Government can recall the vehicle in case a percent of that vehicle owner have reported the defect. This defect could also be reported by certain testing agencies or any other source.
When a manufacturer is asked to recall the vehicle, he must reimburse the full cost of vehicle to its owner, or replace the defective vehicle with new one which should meet with all required safetystandards, or could just repair it in case that could solve the concern. When the defect is found in one of the vehicle’s component then Central Government could ask the manufacturer to recall all the motor vehicles that have that faulty component.
Under this Motor Vehicles (Amendment) Bill, 2016, a vehicle manufacturer could be fined as much as INR 100 crores with or without an imprisonment of one year. Only way to escape this fine is by recalling the vehicles on its own after he informs the Central Government about the defect.
So far 90,000 vehicles have been recalled under this Motor Vehicles (Amendment) Bill, 2016. One such case of massive car recall in India was a recall of more than eight lakh vehicles by Volkswagen due to global diesel emission scandal.
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