For 16 months now, Manish Chandra, 48, has been grappling with a flaw in the Mercedes E-Class (2006 model) he had purchased in 2014 in the used car market. The Delhi-based entrepreneur first discovered the defect in May 2015 when a strong smell of fuel overwhelmed the car cabin. Multiple garage trips and technical examinations followed. The diagnosis? Leaks in the fuel system. Chandra eventually realised that the E-Class models manufactured between 2003 and 2009 have a manufacturing defect in their gas tanks. In 2014, the luxury carmaker, facing class action lawsuits and a federal investigation in the US, had extended its original warranty of two years on gas tank components of E-Class vehicles made in the 2003-09 period to 15 years.In India, however, it seems a different story. This January, Chandra was handed a bill of roughly Rs 5 lakh to fix the problem, with the company offering to bear 25% of it. Aware of the global settlement, Chandra demanded global parity and extended warranty in India. Complaints to the company followed. He reached out to the India boss Roland Folger, and even the Germany headquarters. In May, he sent the company a legal notice. Last month he reached out to the Government of India, drawing attention to his problem and the broader issue of how global MNCs short-change Indians on issues like recalls. The government responded promptly, directing the company to address the issue within 15 days.As of going to the press, Chandra hasn’t heard from the company. The problem persists. His car languishes in the garage. "Now, it is not so much about my problems getting addressed. It is about making carmakers in India accountable to the same standards they are held to globally," says Chandra. When ET Magazine contacted Mercedes-Benz India, the company maintained that it follows a global recall policy and the car in question did not have any recall on the fuel tank."For the recall of a particular vehicle series, globally the company provides the relevant authorities with information about the recall and simultaneously informs the customers in writing through its authorised service partners. The objective is to present the exact nature of the recall that affects the vehicles and to immediately ensure varied service measures, to rectify any technical issue at the earliest. The necessary work to rectify the issue is carried out by Mercedes-Benz in line with the measure free of charge," the company said. It maintained that the Indian operation practises stringent global recall procedures and has an automated dealer management system which is online and brings in complete transparency in this regards, and the customer is duly informed in case of any recall.According to the company, in this particular case, the Mercedes-Benz E-200 Compressor (W211, 2006 model) is "presently in its 11th year of operation and did not have any recall on fuel tank".Even if Mercedes-Benz India has a watertight case, the fact is carmakers are able to get away in India with what they can’t in the developed world. And that may be because of the regulatory vacuum back home as far as car recalls are concerned. Unlike most other countries, there is no mandatory recall policy here.In 2012, the Society of Indian Automobile Manufacturers (SIAM) came up with a voluntary recall code, which has resulted in over 2.3 million recalls so far. But all this is set to change with the Cabinet approving the new Motor Vehicle Act 2016 last month. Besides many other changes, it is now mandatory for carmakers to recall faulty vehicles. Also, the government may appoint a nodal agency to launch its own investigations and order recalls in future. Vehicle recall isn’t the only area that is getting a look-in. Standards for virtually every aspect of the industry — from safety (crash tests) to fuel emission norms (BS-VI), tax laws (GST) to fuel efficiency standards (CAFE), hybrids & e-vehicles (FAME) to end-of-life scrappage policy — are being reset or newly framed. "We are at the cusp of a significant change. The industry has really grown in the last two decades. Maturity of the regulatory environment is critical. If we have to compete in the world economy, we have to adopt global standards," says Shekar Viswanathan, vicechairman, Toyota Kirloskar Motor.Call it the coming of age. Or, simply an inflection point for India’s Rs 4.5 lakh crore automobile industry. Two decades back, it was a fledgling industry, selling just 4.4 lakh cars (often dated models), with around five players jostling for space. Today, it is among the world’s fastest growing markets with annual sales nudging 3 million units and virtually every global carmaker vying for Indian buyers. By 2020, India is expected to touch 5 million units to become the fourth largest car market. Alas, amid the brisk pace of sales growth, India’s regulatory framework for Motown lagged far behind.Belatedly, the gears have begun to shift as old policies are overhauled and new ones rolled out. "Many of these policies have been in the works for a long time. The only difference is that this government is keen to implement and put them to play," says Rakesh Batra, partner (automotive), Ernst & Young India. The impact will be significant — both for the consumers and the industry. A reason why Rakesh Srivastava, senior vice-president, Hyundai Motor India Ltd, says: "By 2020, we will see a new dawn, a new order for India’s auto industry." These new policies and norms will bring the regulatory framework in India almost at par with the best in the world, making vehicles sold in India cleaner, safer and better on all counts.Here’s a quick lowdown on the range of policies that have been rolled out or are in the works.The biggest perhaps is the BS-VI norms (BS stands for Bharat Stage) that comes into effect in 2020, which entail enormous planning and an estimated Rs 70,000 crore of investment if they have to be complied with. As worsening pollution made headlines and pressure from the judiciary and environmentalists built up, the NDA government took an unprecedented step to bring in BS-VI norms by 2020, bypassing the fifth stage and advancing the earlier deadline of 2022. This will bring India’s vehicular emission standards closer to those in Japan, the EU and the US.By April 2017, the Goods and Services Tax (GST) is scheduled to replace over 17 indirect central and state taxes, turning India into one market. While GST affects the entire economy and is not specifically for the auto industry, the impact on Motown will be significant. So far, thanks to tax barriers, interstate movement of components and vehicles is costly, logistically difficult and time-consuming. GST will help smoothen movements and simplify (and lower) taxation. By some estimates, it will cut logistics and supply chain costs by up to 40% and make cars cheaper across the board.To boost sales of eco-friendly hybrid or electric vehicles, last year the government rolled out the FAME policy (faster adoption and manufacturing of electric vehicles), as part of the National Electric Mobility Mission Plan. It offers incentives of up to Rs 29,000 for two-wheelers and Rs 1.38 lakh for electric and hybrid vehicles. The result is beginning to show. Over 80,000 electric and hybrid vehicles have been sold till now. The uptake of Maruti’s mild hybrids cars like Ciaz and Ertiga has been encouraging. Spurred by incentives, the segment is suddenly seeing a lot of action. MNCs like Hyundai, Nissan, Toyota and the homegrown M&M are readying over a dozen new models to launch in the next three years.Effective October 2018, the government is readying a policy to beef up safety features that will bring in stringent crash test norms. It will be applicable for all new models launched from October 2017 and for existing models by October 2018, bringing India at par with global testing norms. According to media reports, this will make it mandatory for cars to have the manual override device that enables a person to open the door with or without electrical power. Besides vehicle reverse gear sensor system in new cars, all cars will be mandated to have a seat belt and a speedometer alert when the vehicle crosses 80 kmph.To push off the road old polluting vehicles offering low mileage, the government is readying an end-of-life scrappage policy. Under consideration is a plan to offer financial sops to owners of old vehicles (over 15 years) to replace their cars. It also plans to set up bodies that will issue fitness certificates and dismantling centres to handle scrapping in a more organised manner.Then there are CAFE (corporate average fuel efficiency) norms. They mandate, besides other things, that fuel efficiency of cars (calculated on the basis of weighted average of a carmaker’s fleet) must improve by 10% and 15% by 2017 and 2022 respectively, with 2009-10 as the base year. While keeping emissions under control, it will also mandate manufacturers to do star ratings for their cars, just like in electrical appliances. Finally, there is the Motor Vehicle Act 2016, amended last month, which mandates stiffer penalties for traffic offences like drunk driving. Safety norms too are being tightened — like mandatory helmets for two-wheelers and safety belts in cars. Besides, it also spells out a vehicle recall policy for the industry. "We were stuck in a time capsule. With so many regulatory changes, we are now trying to make up for lost time," says Vishnu Mathur, director-general, SIAM.Most of the above regulatory changes will kick in between 2015 and 2020. To be fair, all these policies have been long overdue in India. "It is not so much the nature of the regulation as much as the timing and proximity of so many changes that makes it more challenging," says Timothy Leverton, president and head of advanced product engineering at Tata Motors. For example, it took Europe nine years to move from Euro IV to Euro VI emission norms. India will be doing it in almost one-third the time. "It hasn’t happened anywhere in the world. It is not so much about technology. That is available. It’s the time and the costs involved to test and roll out all our models that make it so challenging," adds CV Raman, executive director, Maruti Suzuki.Challenges apart, what is beyond doubt is that this flurry of policy-level changes will have a major impact in the way cars are made, sold and bought in India by 2020.For the manufacturers, compliance standards across the board in India — from safety to emissions and recalls — will become stringent and almost at par with the best in the world. This will demand that the companies bring in their latest technologies and models to India and do frequent refreshes to keep up with the norms, like other markets.While specifics are yet to be spelt out, one of the biggest fallouts of GST will be that the segmentation in the industry might get rejigged. Currently, there are four slabs of excise duties for cars — 12%, 24%, 30% and 40%, depending on the length of the car (sub 4 metre gets 12%), engine capacity and also ground clearance. Companies worked hard to optimally exploit this differential taxation, a reason why many models were launched in the sub 4 metre segment. GST means one tax slab. "For the auto industry it might at best be two tax slabs. Segmentation and sales push based on tax will change and so will the buying behaviour," says Rajeev Singh, partner, KPMG India. For instance, fuel type — diesel or petrol, or hybrid, or electric — may play a bigger role in buyers’ decision-making. With BS-VI emission norms, diesel variants will become pricier and less attractive than petrol even as government incentives will spur demand for eco-friendly vehicles.By 2020, India will have a globally harmonised regulatory mechanism. For Indian carmakers like M&M, "it will help us in catering to global demands better and create a bigger opportunity for us," says Pravin Shah, CEO, M&M Automotive. For MNCs, it might lead to a rejigging of their manufacturing strategy. Says Srivastava of Hyundai: "It will be a lot easier for MNCs to manufacture and cater to global needs from India." This will boost exports.All this will impact the dynamics in the used car market. Here’s how. So far, the used car market has been largely local (because of state registrations) and unorganised (88% of the total). With differential emission norms, there is also a big city/small city divide. Therefore dated cars from big cities can ply and fetch decent price in smaller cities. With GST, India will become one market with seamless inter-state movements. "Residual value of used cars will drop dramatically," says Nagendra Palle, CEO, Mahindra First Choice, a pre-used car mart. Experts see car prices undergoing a reset. While GST will mean cheaper cars in 2017, new safety features and BS-VI norms will make them costlier. Diesel cars could get pricier by almost 20%.As India evolves its regulatory framework to close the gap with other big markets, Wilfried Aulbur , managing partner, Roland Berger India, would like it to move cautiously. "Simply bringing European safety-emission norms to India may not work. India is a very different market. It must find its own solutions," he says. India is a price-sensitive, small car market with thin margins and very different driving conditions. For example, the average speed in Indian cities is around 25 km/hour as against 200 km/hour in Germany. Studies in Delhi suggest that over half of the pollution is caused by road dust, with vehicular pollution contributing just about a fifth. "India cannot afford a major demand contraction in the industry, which creates jobs. It must explore ways to find its own frugal solutions," warns Aulbur.Further, setting norms is the easier part, the tougher task is to do what’s required to make them work. For example, oil companies must meet the deadline to produce BSVI-compliant fuel. "Our past experience makes us a little apprehensive," says Viswanathan of Toyota. Even for the scrappage policy to work, the government must set up inspection and certification centres and also scrapping facilities, says Deepesh Rathore, director of auto consultancy firm EMAAA. Similarly, new safety norms will make cars safer, but will it dramatically improve road safety? India will need to overhaul its road engineering, traffic management and pedestrian mobility to make roads safer, says VG Ramakrishnan, MD of automotive consultancy firm Avanteum Advisors.The industry’s biggest hope is for a sustained policy without flip-flops in between. "This is an industry with huge investments and lead time. What we need is a clear, longterm roadmap, much beyond 2020," says Jnaneswar Sen, senior VP (sales & marketing), Honda Cars India Ltd.