A parliamentary panel headed by Rajya Sabha MP K Keshava Rao has advised that the government should really enact the Franchise Protection Act for automobile dealers in the nation, business body FADA mentioned on Friday.
It mentioned that a “fair competition Franchise Act” will not only be a win-win for each the auto original gear makers (OEMs) and dealers, but will also be effective to clients in the lengthy run, it mentioned.
First introduced by the US in the 1980s, numerous created nations such as Mexico, Brazil, Russia, China, Indonesia, Malaysia, Japan, Italy and Sweden have such guidelines in location to defend the franchisees, it mentioned.
The Federation of Automobile Dealers Associations (FADA), which represents about 15,000 auto dealers across the nation, in September advocated for the enactment of such a law in the nation, immediately after American cult bike manufacturer Harley Davidson announced its exit from India.
“Parliamentary standing committee (PSC) headed by K Keshava Rao has recommended that the government should come out with Franchise Protection Act for auto dealers.
“This recommendation was aspect of recommendations produced by the standing committee in its Report Number 303 titled ‘Downturn in Automobile Sector-Its Impact and Measures for Revival’,” FADA said in a statement.
In its report submitted to Rajya Sabha Chairman Venkaiah Naidu last week, the Parliamentary Standing Committee on Commerce said that in the wake of the COVID-19 pandemic and subsequent lockdowns, the automotive industry suffered a loss of Rs 2,300 crore per day, and an estimated job loss in the sector was about 3.45 lakh.
It has also suggested a slew of measures for attracting investment in the automotive sector in the country, including overhauling of prevalent land and labour laws.
“I am grateful to the standing committee and specially the chairman, K Keshava Rao, for strongly recommending the Franchise Protection Act for auto dealers,” mentioned FADA President Vinkesh Gulati.
He added that the absence of such a law leads to a tussle in managing dealership operations in numerous strategies, brief-terms agreements and non-existence of a clearly defined exit policy.
There are numerous examples exactly where auto makers all of a sudden announced their exit from India, leaving auto dealers higher and dry with their investments going down the drain, he mentioned.
Citing the examples of General Motors India, Man Trucks (a VW Group Company), UM Lohia and Harley Davidson India, the FADA president mentioned franchise laws will basically level the playing field for each substantial automakers and regional dealers.
Currently, practically all auto dealerships are privately owned proprietorship or family members-owned corporations, he added.
Large automobile makers are some of the largest corporations in India and overseas, the automobile dealers’ body mentioned.
Because of the disparity in size and energy in between person dealers and makers, the government demands to accept the standing committee’s suggestions and bring in the Franchise Protection Act to level the playing field in between auto OEMs and dealers, it added.