The penalty imposed on nine carmakers that failed to meet the Corporate Average Fuel Efficiency (CAFE-2) targets over three years - from FY23 to FY25 - has been revised to Rs. 27.28 billion, according to a presentation made by the power ministry to the PMO last week. Earlier, the penalty had been estimated at approximately Rs. 78 billion.

Previously, the penalty structure was set at Rs. 1 million per OEM, along with Rs. 25,000 per vehicle manufactured for non-compliance below 0.2 litres per 100 km, and Rs. 50,000 per unit for violations exceeding 0.2 litres per 100 km. Under the revised calculation, for the April-December period of FY23, the penalty has been standardised at Rs. 375,000 for all OEMs. This revision has resulted in a reduction in the overall penalty amount.

Media sources have learnt that the ministry also stated in its presentation that the credit-debit registry of each original equipment manufacturer (OEM) will be established and maintained by the designated authority. Officials stated that this will support the enforcement of penalties and provisions, while also providing clarity, as the government is working to finalise the norms for CAFE-3.

In its presentation, the ministry stated that surplus credits generated by a manufacturer may be pooled within the same block period - initially three years, followed by two years within the five-year implementation period - for compliance purposes. OEMs with deficit credits may procure credits from other manufacturers holding surplus credits.

Earlier, the PMO had directed the power and road ministries to develop a mechanism for the recovery of penalties imposed on carmakers. CAFE-2 is in force from FY23 to FY27, while the subsequent phase is scheduled to run from FY28 to FY32. It is also understood that the PMO has instructed the concerned departments to reach a consensus on CAFE-3 before the final proposal is submitted to Prime Minister Narendra Modi.