As Ford exits India, Modi govt urged to roll out Dealer Protection Act

By Livemint
Blue oval logo of Ford Motor Company  (AP)

After Ford India's announcement that it is stopping the manufacturing of vehicles for sale in India, theautomobile retail body Federation of Automobile Dealers Associations (FADA) urged the government to roll out the Franchisee Protection Act to protect the dealer community.

FADA on Thursday released a statement on account of Ford India's shocking announcement.

Commenting on Ford India's announcement, FADA president Vinkesh Gulati said, "FADA has been requesting Government of India to roll out Franchisee Protection Act as due to its unavailability, Auto Dealers are not adequately compensated like their counterparts in Mexico, Brazil, Russia, China, Indonesia, Malaysia, Japan, Italy, Australia, Sweden and many other countries, where this law exists. After General Motors, Man Trucks, Harley Davidson, UM Lohia and multiple fly by night Electric Vehicle Players, Ford India is the 5th biggest exit from Indian markets since 2017," the statement read.

"The Auto retail fraternity is really shocked to hear another US Auto Major, Ford India's announcement where it has said that it will shut down production with immediate effect. While trying to handle Dealer anxiety, Ford India President and MD, Anurag Mehrotra called me personally and assured me that they will adequately compensate dealers who continue to offer vehicle service to customers. Though this is a good beginning, it is not enough as there are--170 Dealers who in turn have--391 outlets and have invested 2,000 Crore for setting up their dealerships," he added.

"While Ford India employs 4,000 people, dealerships employ around 40,000 people without displacing them from their home locations thus being continuously skilled and up-skilled all this while. Ford India Dealers currently hold about a 1,000 vehicles which amount to about 150 Cr via inventory funding from reputed Indian banks. They also carry Demo Vehicles which are 100s in number. Moreover, Ford India also appointed multiple dealers until 5 months back. Such Dealers will be at the biggest financial loss in their entire life," he added further.

According to Gulati, the Parliamentary Committee on Industry in its report number 303 which got released in December 2020 had recommended the Ministry of Heavy Industries that the Government should enact the Franchise Protection Act for Automobile Dealers in the country so that it is a win-win for both, the Auto Original Equipment Manufacturers (OEMs) as well as the Auto Dealers, but will also be beneficial to customers in the long run. 

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