He said the new rates, effective from June 1, 2022, would be yet another headwind the sector had to face.

“The automobile industry has been impacted by a series of headwinds, leading to a steady increase in two-wheeler prices,” he said.

“In addition to the pandemic woes, the ongoing shortage of semi-conductor chip, high raw material cost and increasing fuel prices have impacted demand. As the customer continues to struggle with an increase in the cost of ownership, the recently announced hike of Rs 2,200 per vehicle in third party insurance cost will further dent the efforts of the industry to recover itself from this challenging market situation,” added Radhakrishnan.

​​Under the new rates, third party insurance for private cars with an engine capacity between 1000 cc and 1500 cc has been raised to Rs 3,416 from Rs 3,221 in 2019-20. Larger private vehicles that have an engine capacity above 1500 cc will see the premiums fall to Rs 7,897 from Rs 7,890.