400 deaths a day in traffic accidents force India to ramp up efforts to boost safety
In India, more than 150,000 people are killed each year in traffic accidents. That’s about 400 fatalities a day and far higher than developed auto markets like the United States, which in 2016 logged about 40,000.
Now, Prime Minister Narendra Modi’s government is attempting to curb the carnage on Indian roads caused by everything from speeding two-wheelers to cars not equipped with air bags. A bill introduced in August 2016 – proposing harsher penalties for traffic offenses and requiring that automakers add safety features – has passed the lower house of parliament and is expected to go through the upper house in 2018.
The wide-ranging changes are likely to boost manufacturing costs for domestic and foreign carmakers in India. The South Asian country will be the world’s third-largest car market after China and the United Statess by 2020, according to researcher IHS Automotive. The World Health Organization estimates that traffic crashes cost most countries about 3 percent of their gross domestic product.
The U.K.-based nonprofit Global NCAP, which studies the quality of vehicles, has over the years assigned a zero star rating to many small vehicles sold in India – an assessment that there could be life-threatening injuries in a crash at 40 miles per hour. Past efforts in India to boost road safety haven’t taken off, and the success of this one will depend on how strictly it is implemented.
India “has delayed 20 years in making safety features mandatory,” said Dinesh Mohan, a professor at Noida-based Shiv Nadar University. Globally, manufacturers haven’t usually added such safety elements “until and unless they were forced to do so by mandatory government regulations,” he said.
A spokeswoman at India’s Ministry of Road Transport and Highways declined to give a timing for the new law.
Indian consumers are famously price sensitive when it comes to car purchases. Low-cost and no-frills compact cars have long been sold by companies like Tata Motors, Maruti Suzuki India, a unit of Japan’s Suzuki Motor Corp., Renault and Hyundai.
These budget vehicles are usually priced below 400,000 rupees ($6,300), and the new law is likely to require that their manufacturers add a string of features like airbags, audio speed warnings and anti-lock braking systems.
Costs for Indian automakers will shoot up by 7 or 8 percent after the passage of the new law and will be felt across the small car segment, said Deepesh Rathore, London-based director at consultancy Emerging Markets Automotive Advisors.
Ashwin Patil, an analyst with brokerage LKP Shares and Securities, predicts a short-term impact to the earnings of automakers from the new act and said it could be a death knell for ultra-low-priced cars in India as their cost could go up by as much as 100,000 rupees.
Manufacturers sometimes offer “all safety features for the models that are sold in the international markets where they have to satisfy mandatory safety standards, while they offer minimum features for Indian models,” said Mohan.
In 2015, Renault sold its Kwid in India without a frontal airbag or anti-lock braking system, earning the model a zero rating from Global NCAP at the time.
Traffic moves along a highway during morning rush hour in Delhi, India. The country sees about 400 deaths a day in traffic accidents.