New Delhi: The Centre is examining incentives extended by the US, China, the European Union, Japan, and South Korea to small cars under Corporate Average Fuel Efficiency (CAFE) norms to help align local regulations with those in the developed economies, top industry sources told ET.
The development comes even as differences have emerged between leading local carmakers, such as Maruti Suzuki and Tata Motors, on the proposed weight-based concessions for small cars in the third iteration of CAFE norms coming into force next year. Sources aware of the development told ET that the Society of Indian Automobile Manufacturers (SIAM), for the first time, has submitted detailed data to the Centre on incentives extended to small cars under CAFE norms in major automobile markets globally. “The Centre asked for global regulatory data to determine CAFE 3 norms after marked differences emerged between automakers in the country,” a senior industry executive said.
“The differences emerged while debating the draft norms issued by the Bureau of Energy Efficiency (BEE). The data covers 100 per cent of all automobiles sold in countries that have CAFE norms.” SIAM’s data-centric communication to the Ministry of Heavy Industries (MHI) and the Ministry of Power (MoP) came in response to a directive from the Centre.
“The Centre had sought comments from the automobile industry. A call will be taken on the final norms by the Bureau of Energy Efficiency (BEE) after considering all views,” a senior MHI official told ET confirming that suggestions have come and forwarded without any endorsements.
SIAM’s presentation, a copy of which was reviewed by ET, showed China offers relaxations under CAFE to small cars weighing less than 1090 kg, while Europe has relaxed emission targets for cars below 1115 kg and South Korea below 1100 kg.
Japan, meanwhile, follows a continuous parabolic curve where the delta in target keeps on reducing with weight while the US extends incentives to vehicles with a footprint of less than 41 square feet.
In most countries, except for EU, relaxations in emission norms for small cars have been in place since 2015-16.
“The intent is to frame regulations in a manner which supports the environment, fuel efficiency in vehicles, decongestion on Indian roads and build norms that are on a par with global standards,” said the executive cited above.
CAFE 3 norms, aimed at reducing fuel consumption and vehicular emissions, are set to come into effect from April 2027. A car’s CO2 emissions are directly proportional to the amount of fuel it consumes. The BEE issued draft norms for CAFE 3, causing the industry to split ranks.
A DIVIDED HOUSE
Market leader Maruti Suzuki has argued that emission norms be relaxed for small cars that are more fuel-efficient compared with larger vehicles and are important for increasing motorisation among entry-consumers. But others such as Tata Motors have argued that there is “absolutely no justification” for giving concessions to any category of cars in the upcoming norms.
As per the draft rules issued by BEE for CAFÉ 3, cars shorter than four metres, weighing less than 909 kg, and powered by sub-1200 cc engines will get a 3 gram advantage while calculating carbon dioxide (CO2) emissions.
Sales of cars weighing less than 909 kg comprised 7.5 per cent of all passenger vehicles sold in the local market last fiscal, down from 31.5 per cent in FY18. The average share is expected to reduce further to 4.5 per cent of annual sales in the period in which the CAFE 3 will be in force in the five years to FY32.
Small cars don’t have a separate standard under the existing CAFE 2 norms that are in force through March 2027. As per the existing rules, the average emissions of all passenger vehicles weighing less than 3,500 kg including CNG, hybrids and electric vehicles sold by each manufacturer should not be more than 113 grams of carbon dioxide per kilometre.
This means that some models can have higher emissions if the manufacturer has fuel-efficient vehicles in its portfolio.
Tata Motors Passenger Vehicles (TMPV) MD & CEO Shailesh Chandra has said earlier that the original intent of CAFE norms was to “drive OEMs toward greener technologies at a fleet or portfolio level,” without setting targets for individual cars or segments. “OEMs are free to manage their portfolio with appropriate green technologies and meet the target.”
Chandra had said that the existing sub-4-metre definition of small cars, reaffirmed under GST 2.0 based on length and engine capacity, remains appropriate. By this definition, Tata Motors is the second-largest producer of small cars in India, with more than 85 per cent of its unit sales coming from this segment.
“We have absolutely no concerns in meeting Cafe norms… and we see absolutely no justification for any special concession,” he said in the past.
Chandra criticised efforts to classify small cars by weight, calling it “an arbitrary criteria” that could compromise safety.
On its part, Maruti Suzuki said earlier “incorrect facts and narratives are being pushed in a very irresponsible manner by the makers of some large gas guzzlers” to divert attention “from their large gas-guzzlers”.
