Big clash over small cars

Proposed new emission norms have sparked a big versus small car debate in India. Throw tax rates, complex regulations and shifting demand into the mix, and things start to get complicated for automakers

- DEEPAK PATEL

When new emission norms came into force in April 2020, many automakers took older models off the market, realising that upgrading these ageing cars to new lower-emission engines would put them beyond the pockets of buyers.

Back in 2020 it was the Bharat Stage-6 or BS6 norms that got carmakers worried. This time around, the proposed introduction of new Corporate Average Fuel Efficiency or CAFE norms — particularly a proposed weight-based carve-out for smaller cars — has sparked an industry-wide debate.

While BS-6 caps pollutants per vehicle, CAFE limits average carbon dioxide emissions across a manufacturer's entire fleet. Both have the power to reshape a company’s product lineup in India. The third edition of CAFE, or CAFE-3, is set to be introduced within the next few weeks.

The CAFE framework sets average carbon-dioxide emission targets that each automaker's fleet must meet, measured in grams of carbon dioxide emitted per kilometre (g/km) for every model sold. Failure to meet the target can invite stiff penalties.

The Bureau of Energy Efficiency (BEE) published the first draft of CAFE-3 norms in June last year, saying they would apply between FY28 and FY32. The Society of Indian Automobile Manufacturers (Siam), after discussions with its members, submitted its initial comments in December 2024, seeking several changes. A few months later, Maruti Suzuki, India’s largest carmaker and the biggest small-car seller, independently approached the BEE asking it to exempt small cars from the norms, on the basis of their lower weight. This move sharply divided the industry.

The BEE on September 25 this year issued a second draft, incorporating weight-based exemption for the first time. According to this draft, petrol vehicles weighing up to 909 kg, with an engine capacity below 1,200 cc and a length under 4,000 mm, would receive an additional 3g/km deduction in their declared carbon-dioxide emission.