Small cars consume significantly less fuel and emit less CO2 than larger SUVs, Maruti argued, adding that the safeguard would support national emissions-reduction goals.India’s top carmakers — including Tata Motors, Hyundai Motor India, Mahindra & Mahindra and JSW MG Motor — have pushed back against a proposed weight-based concession in upcoming fuel-efficiency rules, warning that the move would distort competition and undermine India’s electric vehicle transition.
In individual letters to various ministries, reviewed by Reuters, the companies urged the government to drop a special exemption for small petrol cars weighing 909 kg or less. While no company was named in the letters, industry executives and sales data indicate that Maruti Suzuki — India’s largest seller of compact cars — would be the biggest beneficiary.
Draft rule triggers industry divide
India is preparing tighter Corporate Average Fuel Efficiency (CAFE) norms, aiming to reduce average permissible carbon dioxide emissions to 91.7 grams per kilometre from the earlier 113 g/km. The new threshold is expected to pressure manufacturers to accelerate EV sales to meet fleet-level targets.
However, in its latest draft, the government has proposed leniency for certain small petrol cars — under four metres long, below 1200 cc and weighing 909 kg or less — on the grounds that such vehicles have “limited potential for efficiency improvements”.
Three industry executives told Reuters that the 909-kg cutoff was arbitrary and unmatched globally, alleging that the exemption appeared tailored to benefit one company. Maruti has the highest share of models in this weight band, with about 16 per cent of its domestic sales coming from sub-909 kg cars.
Tata, Mahindra, Hyundai raise concerns
Mahindra & Mahindra, in a letter to the power ministry, said creating a special category based on size or weight would “alter the level playing field” and derail progress toward cleaner, safer vehicles.
Hyundai, in its representation to the industries ministry, warned that such an exemption could be viewed internationally as “a step backward” at a time when global markets are moving towards tougher fuel-efficiency and zero-emission standards.
“Abrupt policy changes favouring a specific segment risk undermining industry stability and customer interests,” Hyundai said in a statement to Reuters.
JSW MG Motor flagged that more than 95 per cent of cars under the 909-kg threshold come from one manufacturer, calling the proposal “disproportionate” and cautioning against skewing the market.
Tata Motors and Mahindra declined Reuters’ requests for comment.
Maruti defends exemption for small cars
Maruti Suzuki, in response to queries, said that protecting small, fuel-efficient cars aligns with global regulatory practice. Markets including Europe, the United States, China, South Korea and Japan have “provisions to protect very small cars” in their emission norms, the company said.
Small cars consume significantly less fuel and emit less CO2 than larger SUVs, Maruti argued, adding that the safeguard would support national emissions-reduction goals.
Demand for small cars, however, has been declining in India as customer preference increasingly shifts to larger SUVs.
Rule finalisation remains delayed
The dispute has slowed finalisation of the next phase of CAFE norms — a policy crucial for automakers to plan future investments, especially in hybrid and electric powertrains. With EV penetration still modest and compliance costs rising, clarity on emission targets will significantly influence product strategy over the next decade.
The power, transport and industries ministries did not respond to Reuters’ queries on the status of the draft rules.
The industry now awaits whether the government will revisit the proposed concession or push ahead with the exemption in the final regulation.
