"Safety is non-negotiable. The ministry is finalising the rules, which will take some time to be notified," he said, without committing to a timeline.

India in January issued draft guidelines requiring all new cars from Oct. 1 to be fitted with six airbags, including four passenger airbags and two side or curtain airbags. It was expected to finalise the rules a month later but is still analysing feedback from auto companies, the source said.

The comments come a week after India's biggest carmaker told Reuters such a rule will make small cars more expensive and drive away some potential buyers who cannot afford to shell out more for a vehicle.

Driver and front passenger airbags in all cars are already mandatory.

The government estimates adding four more airbags would cost no more than $75. Auto market data provider JATO Dynamics, however, estimates it could increase costs by at least $231.

"The cost implication is exaggerated. The ministry has consulted airbag makers on the cost and time needed to make the parts locally," the person said.

Some companies export cars with additional airbags but the models they sell in India only meet the minimum requirements. Also, top-end variants of cars are typically fitted with four or more airbags but the base models usually have just two, forcing people to pay more for their safety, he said.

"Carmakers should provide airbags as a matter of safety, it should not have to be mandated by the government. We're having to step up regulations because companies are not doing it on their own," he said.

The ministry estimates that having airbags, along with seat belts, would have saved the lives of at least one-third of the 39,000 people who died in road accidents in 2020 due to head-on or side collisions.

(Reporting by Aditi Shah; Editing by Kim Coghill)

By Aditi Shah