Self-regulation is a rarity in any industry in India, so there can be no argument that the Society of Indian Automobile Manufacturers (SIAM) has set a good precedent by putting out a voluntary recall policy for its 46 members. SIAM represents an important and highly visible segment of the manufacturing sector, so the initiative is a trendsetter of sorts for industry in a country with insufficiently robust consumer rights. Even so, the exercise seems more cosmetic than a genuine attempt to address a serious consumer issue. First, the voluntary guidelines were announced around the same time that the government was said to be considering a mandatory recall policy, suggesting that the industry was looking at pre-empting the dreaded hand of official regulation. But the code would have acquired greater credibility if the manufacturers had chosen to be more stringent on themselves. Although the code sets out the conditions under which a recall is triggered – understandably, they mainly concern safety aspects – too much is left to manufacturers’ judgement.
The operative part of the code is that it would be left to the “sole discretion” of the manufacturer to decide whether the number of vehicles is sufficient to justify a recall. Given the short history of recalls, such reliance on corporate consciousness and self-realisation is unlikely to bolster consumer confidence. In 2010, Maruti recalled 100,000 units of its A-Star to replace a faulty fuel pump, but only after the defects were noted in units exported to Eastern Europe; Honda’s recall of the City was part of a global exercise. So without an independent panel to monitor consumer complaints, this policy becomes meaningless. It could, of course, be argued that companies are unlikely to sidestep their obligations if only to protect their brand — after all, everyone remembers the beating Toyota took in the US over a faulty accelerator pedal. Tata Motors did take the initiative in 2010 to install additional safety features in 70,000 Nanos when some of those cars displayed a propensity to catch fire, and it replaced the starter motors in 140,000 units, although it declined to describe these as recalls. But it is also true that these replacements took place against the backdrop of critical reports in the domestic media for a car that had attracted global attention.
More crucially, the code also does not provide for a penalty for companies that default on the obligations. In other words, the costs of non-compliance are virtually zero, vitiating the entire purpose of the exercise. Instead, SIAM has suggested government intervention, without specifying what this might be. In any case, this is a strange solution to an initiative that seemed designed to escape the fell hand of official regulation in the first place. Overall, it is hard to escape the conclusion that the voluntary recall policy is more about optics and less about helping the consumer.