At the start of the 1970s the waiting period for a scooter in India was 7 years. With 2.6 lakh pending bookings and annual production of just 48,392 scooters in 1970, this wasn’t surprising.
If you booked a scooter before your wedding, you had school-going kids by the time your scooter arrived. And things got worse before they got better – by the end of the decade the waiting period had increased to 10 years.
Test Of Patience
Buying a scooter in the 1970s was a test of patience. It started with you writing an application to the dealer. Then you went to a post office, opened a savings account and made a security deposit of Rs 250. The post office gave you a passbook, which you submitted to the scooter dealer as proof of intent to purchase.
And then the long wait started. When your turn came after 7, 8 or 10 years, the dealer returned the passbook and “authorised” you to withdraw your Rs 250 to make the full payment. To check blackmarketing, you weren’t allowed to sell your new scooter in the first year of purchase without the state transport commissioner’s permission.
This procedure had been laid down in a 10-year-old rule called ‘Scooters (Distribution and Sale) Control Order, 1960.’
Shifting Goalposts
The scooter shortage had been building up over the years, and the only way out of it was to increase production, but the government’s policies and attitude made it difficult.
Those days, any project that needed an investment of more than Rs 10 lakh in foreign exchange had to be cleared by the ministry for Industrial Development, Internal Trade and Company Affairs. In 1965–66, many industrialists had applied for permission to set up scooter factories in India, but the ministry sat on their applications.
Eventually, all of those private proposals were scrapped and the government came up with a new rule allowing private companies to make scooters only if they did so “without foreign technical know-how and without foreign assistance.”
How was somebody with zero experience of automobile manufacturing to make a scooter without a technology tie-up? This rule was unfair also because Automobile Products of India (API) and Bajaj Auto had been making Lambretta and Vespa scooters, respectively, with foreign know-how, for years. And their components were still not fully localised. But the government said their licences were up for renewal in less than a year, after which they would be expected to make every part in India.
Despite this near-impossible condition of indigenous design and production, private businesses responded enthusiastically. By February 1970, there were 31 proposals before the government, but once again it sat on them. In May that year, then industries minister (later President of India) Fakhruddin Ali Ahmed said, “Within six months some decision will be taken.”
Scooters India Fiasco
But the decision that followed surprised everybody. The government announced it would set up its own scooter company “with indigenous know-how”. On May 11, 1970, Ahmed said in Parliament: “Jo public sector mein karkhana lagaya jayega, vah bhi yahin ke maal ke upar lagaya jayega jo ki hamare mulk mein banaya ja raha hai (all equipment used in the government scooter factory will be fully indigenous).”
For two years the government did nothing, and then, proving the absurdity of its own policy, it went and bought Italian scooter-maker Innocenti’s factory in Milan for $1.85 million (Rs 1.5 crore in those days at an exchange rate of about Rs 8 to a US dollar). It bought the “entire plant along with all auxiliaries as well as the technical know-how, including worldwide trademark and export rights… of M/s Innocenti, owners of the Lambretta brand”.
The government admitted that bringing a scooter to market from the drawing-board stage would have taken 7-8 years, so an outright purchase was the wiser option. It promised to make 1 lakh scooters every year to shorten the waiting lists. But that was wishful thinking as the first scooter from the government-owned company – Scooters India Limited – was not expected to roll out for at least two years.
Besides, in correcting one mistake the government had made another. It had sunk its money in a scooter that had lost the race to Vespa globally and was a distant second choice in India. As against 84,883 pending Lambretta bookings on March 31, 1970, there were 176,933 bookings for Vespa scooters. So Scooters India Limited never ran to capacity even in those shortage years. Instead, it ran up huge losses before it went bust.
Queues Grew Longer
Meanwhile, the waiting period for a scooter went on increasing. A study group of the government’s Planning Commission estimated that 2.1 lakh scooters would be needed in 1973–74. The think tank National Council of Applied Economic Research (NCAER) said annual demand would increase to 243,000 scooters within eight years, by 1979–80. But yearly scooter production in 1971 was less than 70,000 units.
Once again, government policies were holding back production. API and Bajaj were allowed to make only 50,000 scooters each. When they applied for permission to increase production capacity to 100,000 units each per annum, the government started reviewing their applications under the Monopolies and Restrictive Trade Practices Act.
As for the new companies that wanted to get into scooter manufacturing, the government told them it would grant licences based on “what price they are going to charge the consumer and whether they can efficiently manufacture the scooter or not”.
But the new licensees would also have faced the production cap of 50,000 scooters per annum, making it difficult for them to compete with API and Bajaj on price. So, the new suitors dispersed, Scooters India Limited disappointed, and the waiting period for a scooter in India gradually increased to 10 years.
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