Tailpipes Mustn't Get to Wag India's Car Market

India's proposed CAFE norms will disadvantage makers of small cars unless we rethink the formula for carbon targets. We shouldn't let policy distort incentives in favor of big vehicles

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Controversy is raging in the Indian automobile industry over what India's new norms for Corporate Average Fuel Efficiency (CAFE) should be. Maruti Suzuki has said the current proposals are unfair to makers of small cars, while the rest of the industry—makers of bigger cars, mostly, including EVs—seems to support the CAFE-2 norms proposed for 2027-28 onwards and CAFE-3 five years later.

Whether India's largest carmaker expects special treatment for small cars (as with GST) or a correction of this policy designed to reduce carbon exhaust depends on what's at stake here. Since this is about a road traffic clean-up, it is hard to ignore a basic flaw in our CAFE norms: they do not take into account the number of people moved.