The government of India may allow local original equipment manufacturers (OEMs) to adhere to a less stringent fleet-wide carbon dioxide emission target from 2027-28, when the new Corporate Average Fuel Efficiency (CAFE III) norms are scheduled to come into force.

According to sources, a consensus has emerged on the issue, and the proposal submitted by the Society of Indian Automobile Manufacturers (SIAM), which sets a target of 89.6 grams of CO2 emissions by 2032, may be accepted.

This target is higher than the 71.5-gram target proposed by the Bureau of Energy Efficiency (BEE) in the latest draft of the CAFE III norms.

"What is understood is that there will be no fresh drafts from the BEE on the CAFE III norms, only a final notification. This is likely to be issued by the end of the month. During recent consultations, the government has considered SIAM's proposals, making it possible that the flatter emission trajectory proposed by SIAM will be accepted," the sources said.

In an earlier representation, SIAM stated that the 71.5-gram target proposed by the BEE would require a 63%, or nearly two-thirds, reduction from current CAFE II levels, "which is unprecedented globally. Such a threshold may result in the premature scrapping of multiple vehicles, causing distress to the automotive industry, including auto component suppliers."

The BEE released the draft CAFE III norms in September last year, defining emission caps for OEMs' vehicle fleets over a five-year period starting from 2027-28.

Car weight to decide emissions?

One of the proposals in the latest BEE draft norms was to base emission standards on vehicle weight. The amended draft released in September last year proposed a relaxation of 3 grams for cars weighing up to 909 kg, which has resulted in differing views among OEMs.

One stakeholder said that the government may not accept weight-based relaxation of emission standards for lighter cars, as it is considering SIAM's proposal for less stringent overall emission targets from FY28.

"By accepting SIAM's proposal for a flatter slope in emission tightening, the government is already reducing the impact of emission targets on lighter cars. It is possible that the weight criterion for determining emission standards will be dropped in the final notification," the stakeholder said, requesting anonymity.

A senior official from one of the ministries involved in finalising the CAFE III norms had earlier stated that stakeholder consultations had been completed and that the Ministry of Power would take a decision on the matter.

He had said earlier, "The large car lobby is seeking permission to continue to pollute for longer. We will align our views with what the Ministry of Power ultimately agrees to. The final CAFE III regulations are likely to be based on 'real-world' emission targets, and the International Centre for Automotive Technology (ICAT) is defining these. The final norms may tighten fleet-wide emission targets by 20-25%."

When asked about lobbying by different OEMs for and against relaxation for small cars, he said, without elaboration, "We cannot allow large cars to continue polluting for longer."

In recent months, the proposed relaxation for small cars has led to differing positions among OEMs such as Maruti Suzuki India and Toyota Kirloskar Motor, which have a higher share of small cars in their portfolios, and manufacturers including Tata Motors, Mahindra & Mahindra, and JSW MG Motor India. The former group has supported the continuation of relaxed emission caps for small cars, while the latter has supported uniform emission standards across all vehicles, irrespective of weight. In India, passenger vehicles weigh between 750 kg and 2,500 kg, with the industry-average vehicle weight estimated at 1,170 kg.

A second stakeholder said that acceptance of SIAM's proposed lower overall emission targets would also benefit small car manufacturers. "However, this would only be partially helpful, as it does not fully compensate for the requirement of lower emission standards for small cars," the stakeholder said.

A spokesperson for Maruti Suzuki India stated, "There is global precedent for policy provisions for small cars under CAFE regulations. China, the United States, Korea, 27 countries in Europe, and Japan have such provisions. The expectation is that the Government of India will consider these precedents while framing the final norms."

In its submission in November, SIAM stated that its members hold "mixed" views "on the topic of the benefit of a 3 gram relaxation for petrol cars below 909 kg unladen mass".

Other industry concerns

SIAM also raised concerns on several other issues covered in the draft CAFE III norms. On battery electric vehicle (BEV) emissions, SIAM argued that tailpipe emissions should be treated as zero, stating that this approach is "in line with CAFE norms" and is "necessary for India".

The BEE proposal assigns BEVs an emission value of 29 grams, citing the fact that electricity used for charging is derived partly from non-renewable sources. On changes proposed in the revised CAFE III draft related to super credits for electric vehicles and fuel cell electric vehicles (FCEVs), SIAM stated that these changes are not "aligned with the government's focus on these technologies".

The latest proposal reduces super credits for BEVs from four to three compared with the previous draft, increases credits for strong hybrids from 1.2 to 2.0, and introduces a new category of vehicles, termed Range Extender Electric Vehicles, which are assigned three super credits. Super credits allow an OEM to count the sale of one low-emission vehicle as multiple vehicles in the calculation of fleet-average carbon dioxide emissions.

What CAFE III draft says

The draft introduces a mass-based linear formula to determine the Annual Average Fuel Consumption Standard, expressed in petrol-equivalent litres per 100 kilometres, that a manufacturer must meet. The standard is linked to the manufacturer's weighted-average unladen mass across its fleet. The proposal provides for annual tightening of the standard from 2027-28, reaching 3.01 litres per 100 km by 2031-32.

This means that permissible emissions for each OEM's fleet will decline each year, and manufacturers will be required to demonstrate that their Annual Average of Actual Fuel Consumption is less than or equal to the applicable standard for that year. The draft also outlines mechanisms to account for the inclusion of low-emission and alternative-fuel vehicles.