The Parliamentary Standing Committee (PSC) headed by Dr. K Keshava Rao has recommended that the Government of India should introduce a Franchise Protection Act for car dealerships.

This recommendation comes a few days after Harley-Davidson exited the India market, leaving its 33 dealership partners in the lurch. It was a part of suggestions made by the Standing Committee in its report titled “Downturn in Automobile Sector-Its Impact and Measures for Revival”.  The original recommendation came from the Federation of Automobile Dealers Association (FADA), whose members objected against the alleged unfair treatment metd out by Harley-Davidson over compensation and the subsequent adoption of just 10 dealerships by Hero MotoCorp. Hero MotoCorp has agreed to continue sell and service Harley's bikes in India under an agreement signed a few months ago.

India does not have a franchisee law at present due to which the vehicle maker - Dealer agreements are highly skewed towards manufacturers. This leads to a tussle in managing dealership operations in various ways, very short term agreements and non-existence of a clearly defined exit policy,” said a statement from FADA.

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