Driving in India: Cars, Corruption, Collisions

A pack of about two dozen men stand outside the front gate of the Mumbai Road Transport Office, the Indian city's version of the Motor Vehicles Dept. As residents head inside to do battle with the bureaucracy, the men swarm around them, offering pain-free shortcuts through the red tape for just 3,000 rupees ($65). "What do you want—a driver's license or learner's permit without a test?" asks a man identifying himself only as Rafiq. "It will happen," he promises. Like the other "agents" at the front gate, Rafiq specializes in paying $1 bribes to officials to cut down to a few hours a process that typically takes a full day.

More Indians are buying cars, and more carmakers are rushing to accommodate them. On Dec. 1, Toyota Motor (TM) launched a new locally built compact sedan, the Etios, aimed at budget-minded Indian drivers. You can't drive without a license, so there is big demand for men like Rafiq who can help new drivers get behind the wheel without taking exams or filling out paperwork. Some agents have as many as 30 employees on a monthly payroll, says Rafiq, who nets between 500 and 1,000 rupees a day. "There is a lot of competition here," he says. "In India, you can get a driver's license as easily as a chai," says Delphine Muhlbacher, president of the Headlight India safety advocacy group, referring to a local tea drink. "In this context, driving licenses can sometimes turn into licenses to kill."

Having illegally obtained their licenses, drivers often pay little attention to traffic laws. "There is absolute lawlessness on the streets," says Satyendra Garg, New Delhi's joint police commissioner for traffic. "Unless there is a policeman at every intersection, people don't obey any traffic rules." That helps make India's congested roads the deadliest in the world. According to a government report, crashes in India killed 119,860 people in 2008 (an average of 327 a day), compared with 37,261 fatalities in the U.S. Traffic accidents cost the nation about 3 percent of its gross domestic product every year, according to Indian government data.

The problem is likely to get worse. Auto sales in India are on pace for a record-setting year: Sales of passenger vehicles in October rose 38 percent from 12 months earlier, prompting automakers to say they may exceed a sales forecast of 2.4 million autos in the fiscal year ending Mar. 31. In fiscal 2001 just 615,000 cars were sold. Carmakers in India are benefiting from a $1.3 trillion economy that expanded 8.9 percent in the three months through September from a year earlier. Salaries may grow an average of 11 percent this year, the fastest rate in the Asia-Pacific region, according to human resources adviser Aon Hewitt.

To capitalize on the growing market, a race is on to introduce low-cost cars to India. The latest is the Etios. Priced at 496,000 rupees ($10,900), it is the Japanese automaker's cheapest offering in India and will compete with low-cost small cars from Honda Motor (HMC), Ford Motor (F), and Suzuki. "We are aiming for a full-scale presence in India," Toyota President Akio Toyoda said at the launch of the Etios in Bangalore.

Since the Indian consumer is so price-sensitive, though, many made-in-India cars don't have safety features common to other markets, according to a recent government report on highway safety. Seat belts are the only safety feature that automakers must legally provide—even Tata Motors' (TTM) ultracheap Nano car has them—yet the increase in car buying hasn't boosted demand for air bags or antilock brakes. "It will take time for all the manufacturers to add safety features to their cars," says C.V. Raman, chief general manager for engineering at Maruti Suzuki India, the nation's largest manufacturer, with about half the market. "We give customers a choice whether they want a fully loaded car with all the safety features or a car without those features at a lower cost."

Activists say India needs to learn from China, which has far more cars yet fewer deaths. There were 186 million vehicles on China's roads at the end of last year and 67,759 deaths, down 7.8 percent from a year earlier, according to China's Ministry of Public Security. The Chinese strategy to improve road safety has included a crackdown on drunk driving as well as increased fines for speeders caught on newly installed road cameras. "China is a different story," Garg says. "There is a strong enforcement of strong laws."

Meanwhile, a bill to create an agency similar to the U.S. National Highway Traffic Safety Administration died in August. Parliament's transportation committee decided the proposed legislation wasn't comprehensive enough, created duplication among agencies, and didn't eliminate what the committee called "the menace of corruption."

The bottom line: As Indians grow more affluent and buy more cars, road safety is increasingly an issue. Fatalities exceed anything in China or the U.S.

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