Auto industry lobbying spurs revision of India’s CAFE norms

India is likely to propose a new draft of the Corporate Average Fuel Efficiency (CAFE) norms followed by final rules later this month. This comes after the auto industry made a case that the norms to cut emissions proposed in the draft CAFE 3 regulations were too stringent and are likely to result in penalties for car companies.

On Tuesday, domestic automobile majors held a meeting with the ministry of heavy industries (MHI), where Union Minister H. D. Kumaraswamy attempted to allay their concerns, said people familiar with the developments.

Industry executives communicated to the government that emissions were tightened by about 15% when carmakers transitioned to CAFE 2 from CAFE 1 and that the new norms proposed under CAFE 3 envisage a cut in emissions ranging from 24% to 39%.


A leading carmaker is learnt to have said that it can only cut emissions by about 21% in the first year, beyond which it will be forced to bear penalties.

Kumaraswamy assured automobile companies that the new CAFE norms would not offer any undue favours or penalties, said a senior executive.

Representatives from Tata, Hyundai, Suzuki, Mahindra, Honda, Kia, BMW, Mercedes, Toyota, JSW-MG, Renault, Nissan, and Skoda-VW, along with the Society of Indian Automobile Manufacturers (SIAM), were present in the meeting.

Separately, intense lobbying is underway within the domestic automobile industry, which is divided on the extension of relaxation to small cars in the upcoming CAFE norms.

Carmakers like Maruti Suzuki and Tata Motors differ over the proposed weight-based concessions for small cars in the third iteration of CAFE norms, which are set to come into force in 2027.

While Maruti Suzuki has urged the government to relax emission norms for small cars, which are more fuel-efficient compared to larger vehicles and are important for increasing motorisation levels among entry-level consumers, others like Tata Motors have held there was “absolutely no justification” for giving concessions to any category of cars in the upcoming norms.

On Tuesday, Niti Aayog in a report on “Scenarios Towards Viksit Bharat and Net Zero” for the transport sector, noted that India should incentivise the adoption of light-weight, fuel efficient, smaller entry-level cars under Corporate Average Fuel Efficiency (CAFE) as is increasingly the case in leading global markets, while it also account for life cycle emission benefits of sustainable biofuels.

It further stated that to ensure that CAFE norms remain credible and future-ready, India must adopt a time-bound plan to sunset the relaxations and shift toward true lifecycle-zero vehicles. "Doing so will not only align with the modelled Net Zero pathway but also prepare the domestic auto industry for global low emission export standards," it noted in its report.