The road ministry has decided to form an inter-ministerial group (IMG) to fix the quantum and severity of punishment against General Motors India over irregularities in emission norms, which lead to the recall of 1.26 lakh Taveras recently.
The IMG, which comprises representatives from various ministries and departments including roads, economic affairs, legal affairs, DIPP and heavy industry, is expected to hold its first meeting later this week to review the suggestions of a three-member government panel, which said in its report that the company was responsible of committing what it called a "corporate fraud" and said its top management, including CEOs and managing directors (2005 to 2011-12) were also involved.
Sources said the ministry of roads, transport and highways (MoRTH) had the option of taking a decision on penalising the company on its own but decided to seek wider consultations because the outcome may adversely impact not only the auto sector but the current and future foreign investment from US-based companies.
"Other departments are being called to assess merit in taking a caliberated approach while penalizing the company so that foreign investment in the country is not harmed and on the same hand, a strong message is also given to the auto manufacturers for flouting norms," a source in the road ministry said.
The panel was constituted to investigate General Motors India's recall of over 1.26 lakh Chevrolet Taveras recently.
The panel was headed by Nitin Gokarn, chief executive of National Automotive Testing and R&D Infrastructure Project (NATRiP), which is involved in testing, validation and R&D. The panel gave a clean chit to the testing agency — Indian Automotive Research Association of India (ARAI).
The three-member panel, however, recommended imposition of a penalty and a systemic clean-up to avoid recurrence of similar incidents in future. Although action has been suggested against the company as well as executives involved, the level of penalty has not been specified, sources said.
The financial penalty as of now, according to the CMV rules, amounts to Rs 11 crore. However, a decision on the same would also be taken in the IMG.
The committee was set up to probe if the auto major had a role in violating the engine testing norms after it issued what was then the largest-ever recall for flouting the compliance of production (COP) norms.
Under COP, companies have to produce vehicles and components that exactly match with the specification, performance and marking