Industry Deadlock Stalls Final Fuel Efficiency Norms

(MENAFN- Live Mint)

New Delhi: India's top energy efficiency agency feels frustrated as the dialogue with the nation's largest auto lobby has stalled over the new fuel efficiency norms, delaying final rules that aim to cut carbon dioxide emissions from vehicles.

The third edition of the Corporate Average Fuel Efficiency (CAFE 3) norms was expected to be finalized by this month, according to four people aware of the matter. Yet, the Society of Indian Automobile Manufacturers (Siam) has not submitted its feedback even within the extended period, the people said.

The Bureau of Energy Efficiency (BEE) is unhappy that the auto lobby has neither fully cooperated nor sorted out differences within the grouping over demands for partial relief for small passenger and commercial vehicles, the people said, speaking on the condition of anonymity as details are private.

The draft CAFE 3 norms propose reducing an automaker's average emissions from the current 113 g/km to 91.7 g/km. The stricter cap is aimed at promoting fuel-efficient vehicles as part of India's clean energy and Net Zero goals. The rules come into effect on 1 April 2027, and automakers will need time to prepare for the stricter limits.

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“Two things happen when there is a delay. One, everyone gets less time to prepare. And second, those who are already prepared are not incentivised," said Amit Bhatt, managing director at International Council on Clean Transportation.“The eyes will be on the regulator on what it decides. Whatever it decides, the fact is the industry will come together once regulations kick in. All the OEMs (original equipment makers) have the technologies to meet the norms."

Siam, however, has called the final draft aggressive. Still, during deliberations within the lobby, differences emerged as Tata Motors Ltd and Mahindra and Mahindra suggested that smaller commercial vehicles be exempted from the norms, said the first person privy to the discussions. Maruti Suzuki India Ltd countered:“Why should that logic not be applied to small cars?"

“Our CAFE norms remain trapped in outdated bureaucratic processes. Without updated standards, unchecked emissions will rise, innovation will stall, and India's auto industry will remain uncompetitive," former NITI Aayog chief Amitabh Kant said recently. He called on the government to finalise the norms immediately.

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No consensus on passenger vehicles

The BEE released the first draft of CAFE 3 norms for passenger vehicles in June last year. Siam responded to the first draft in December 2024. However, the lobby later abandoned the consensus recommendation after Maruti Suzuki, the nation's largest carmaker, sought the inclusion of concessions for small cars weighing less than 1,000 kg in June this year.

Mahindra and Tata Motors, which have invested heavily in electric vehicles, objected, Mint reported earlier.

The first of the four people quoted earlier said the government communicated with the auto lobby in June to suggest ways to provide concessions.

Siam members began working on latest recommendations, which are expected to mirror the December consensus but with a possible addendum on how small cars can be provided concessions, the third and fourth persons quoted earlier said.

When asked about the final suggestions, Partho Banerjee, senior executive officer, marketing and sales at Marut Suzuki, said on the sidelines of Siam's annual convention on 11 September,“The technical committee is working on it. It will take some more time."

Queries emailed to BEE, Siam, Maruti Suzuki and Tata Motors remained unanswered until press time. Mahindra and Mahindra declined to comment.

“Consultations over any regulations must revolve around a proposal," said former power secretary Alok Kumar, who was in office when CAFE norms were tightened in 2022.“The industry, whenever any new norms are in discussion, needs enough time to comply with them," he said, adding that there were differences between the industry and the government even in the past.

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Industry divided on CVs too

The final draft of Constant Speed Fuel Consumption (CSFC) norms for commercial vehicles came out on 28 July, asking manufacturers to submit feedback within 30 days. However, Siam members disagree on providing concessions to small commercial vehicles, a demand by Tata Motors and Mahindra.

According to the second person quoted earlier, who was privy to the discussion at Siam and BEE meetings, commercial vehicle makers sought an indigenously developed tool for testing fuel efficiency norms and concessions for small commercial vehicles, citing that these are used by economically weaker sections.

While BEE disagreed with the demand, it sought additional data from Siam during a July meeting within a fortnight. The group did not get back to the agency's request.

As Siam didn't respond, the agency released the final draft in late July, catching the companies by surprise, the second person said.“The agency was left frustrated with Siam's approach, which was akin to a 'non-cooperation movement.'"

After the final draft release, the agency again invited comments from all stakeholders within 30 days, but Siam didn't respond during this period either.

The CSFC norms' final notification is still pending.

However, two Siam representatives involved in the deliberations said that the agency has not been able to fully understand the technicalities of the auto industry's suggestions.

“When we talk about using an indigenously developed tool for testing the efficiency of commercial vehicles, it is perceived as a delaying tactic," one of these two people said.“The agency has to realise the auto industry is also committed to reducing emissions."

Still, on passenger cars, the auto lobby finds itself in a difficult spot as members are not on the same page.“We work on consensus, so until everyone agrees on what recommendations to send, we cannot move forward," the person said.

According to Kumar,“Fuel efficiency norms for trucks are even more important because they came about 4-5 years after CAFE norms for cars. Also, with long-distance trucking still reliant on diesel, and India looking to reduce its fuel import dependence, it is necessary to put this regulation in place on time, in line with global timelines, but after giving time to the industry to comply."

Some executives in the auto lobby believe the involvement of the ministry of road transport and highways would have made things easier, instead of working with BEE, the first person quoted above said.“MoRTH understands the nuances of the auto sector better than any other agency so working with them would have made things better."

However, according to Kumar, the government does not work in silos, and the ministries will conduct consultations among themselves.

Key Takeaways

• India's new CAFE 3 norms were expected to be finalized by this month
• But the auto lobby has not responded to BEE's call for feedback on the final draft
• Timely notification of new rules is important to give companies enough time to prepare for 1 April 2027 rollout
• CAFE 3 norms reduce the average fuel efficiency cap for each automaker as part of India's clean energy goals

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