Auto Giants Clash as CAFE 3 Norms Put Small-Car Makers at a Disadvantage
Carmakers split over CAFE 3 norms, as weight-based rules may hurt small cars and EV progress.
India's proposed Corporate Average Fuel Efficiency (CAFE) Phase 3 norms, set for implementation from fiscal 2027-28 to 2032, are sparking a fierce divide within the automotive sector over a weight-based emission concession for smaller vehicles, with critics accusing it of favoring market leader Maruti Suzuki at the expense of competition and the nation's electric vehicle ambitions.
The norms aim to tighten fleet-wide CO₂ emission limits to 91.7 grams per kilometer from the current 113 g/km, but a draft provision offers relaxed targets—potentially up to 3 g/km lower—for cars under 909 kg, less than 4 meters long, and with engines below 1,200 cc. Automakers like Tata Motors, Hyundai Motor India, Mahindra & Mahindra, and JSW MG Motor argue this "special category" is arbitrary, lacks global precedents, and disproportionately benefits Maruti, which derives about 16% of sales from qualifying models like the Alto and S-Presso.
The contention stems from CAFE's core mechanism, which calculates a manufacturer's average efficiency across its passenger vehicle fleet under 3,500 kg. Heavier vehicles, such as SUVs, inherently face steeper targets due to physics—requiring more energy for propulsion—but the proposed concession would ease compliance for lightweight cars, allowing Maruti Suzuki, Toyota Kirloskar Motor, Honda Cars India, and Renault India to offset emissions from any less-efficient models. Opponents, in letters to the ministries of power, transport, and heavy industries, warn that this distorts the level playing field and undermines incentives for broader innovation.
They highlight that over 95% of sub-909 kg cars belong to one player, per JSW MG Motor's submission, potentially delaying the finalization of rules crucial for powertrain investments. Maruti Suzuki counters that small cars already emit far less CO₂—up to 20-30% lower than SUVs—and the safeguard aligns with CAFE's original intent to encourage efficiency without punishing affordable, fuel-sipping options that dominate India's mass market.
A deeper flashpoint is the concession's clash with India's electrification drive, as battery-electric vehicles (EVs) are 20-30% heavier than internal combustion engine equivalents, pushing manufacturers toward costlier compliance strategies like hybridization or advanced turbocharging for larger models. Tata, Mahindra, and Hyundai—leaders in EV and SUV segments—contend that exemptions for light vehicles could slow EV adoption by reducing urgency for zero-emission tech across the board, contradicting national goals under the Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme and net-zero pledges by 2070.
Maruti Chairman R.C. Bhargava has urged a rethink, arguing the European-inspired norms overlook India's preference for compact cars amid third-world infrastructure, while SUV makers like Mahindra label the pushback as self-serving from "gas-guzzling" rivals. This rift risks fragmenting industry lobbying, with small-car advocates seeking even greater relaxations and larger players demanding uniform standards to foster equitable progress.
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As the government weighs feedback ahead of finalization—expected soon to align with BS-VII emission upgrades—the debate underscores broader tensions in India's auto evolution: balancing affordability, safety, and sustainability. With passenger vehicle sales projected to hit 7 million units annually by 2030, skewed norms could inflate prices for heavier EVs or hybrids, alienating budget buyers and stalling the shift to greener mobility. Stakeholders await clarity, but the split highlights how policy tweaks can inadvertently crown winners in a Rs 10 lakh crore industry racing toward a multipowertrain future.
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