Automakers in India must reduce carbon emissions by one-third over the next three years or face substantial penalties under the third iteration of Corporate Average Fuel Efficiency (CAFE) norms, as mandated by the Bureau of Energy Efficiency (BEE). This move by India's energy efficiency agency is expected to increase car prices, adding to the 30% rise seen since the transition to Bharat Stage VI emission norms in April 2020.
"The challenge is not only to develop vehicles that meet the stringent CAFE 3 and CAFE 4 norms but also to price them attractively. Low emission vehicles need to be affordable to gain market acceptance; otherwise, there will be no benefit, and it will negatively impact the company's CAFE score," an industry executive commented. Industry stakeholders are expected to submit their feedback by the first week of July, after which BEE will finalise the guidelines. CAFE 3 norms will take effect in April 2027.
BEE has proposed targets of 91.7 gm CO2/km for CAFE 3 and 70 gm CO2/km for CAFE 4, based on the World Harmonised Light Vehicles Testing Procedure (WLTP).
However, BEE has offered a small reprieve by extending the transition period to CAFE 4 norms from three to five years, which aims to reduce vehicular carbon emissions by an additional 24% by 2032. Industry stakeholders were concerned that a shorter transition period would adversely affect product planning, development, and investment cycles.
A second senior industry executive, who wished to remain anonymous, noted, "While the government has extended the transition to CAFE 4 to five years, the targets are challenging. Carmakers must reduce carbon emissions and fuel consumption across their entire fleet in the next three years, with parameters measured according to WLTP. After March 2027, fuel consumption readings are higher under WLTP compared to the Modified Indian Drive Cycle (MIDC)."
CAFE norms apply to a company's entire vehicle production, limiting carbon emissions from all vehicles sold in a financial year. Manufacturers face stiff penalties for non-compliance, which authorities believe will push them to produce more fuel-efficient cars.
According to the proposal, if the average fuel efficiency of a carmaker's sold vehicles exceeds the limit by up to 0.2 liters per 100 km, the penalty is Rs 25,000 per vehicle. If it exceeds by more than 0.2 liters per 100 km, the penalty is Rs 50,000 per vehicle.
(Source: ET)
