In 2015, the Ministry of Power adopted fuel economy regulations for automotive manufacturers. The Corporate Average Fuel Efficiency (CAFE) applies to vehicles with a gross vehicle weight of less than 3.5t and was implemented in a two-phased approach. In 2017 (Phase I), a manufacturer's sold vehicle fleet was to meet the target of 130g CO2/km, while Phase II (which took effect in April 2022) tightened the target to 113g CO2/km.
The government of India is developing the CAFE III norms, which will come into effect in April 2027. This phase will further reduce the carbon emission target to 91.7g CO2/km.On 25 September, India's Bureau of Energy Efficiency (BEE) released an updated draft of the Corporate Average Fuel Efficiency III (CAFE) standards, which provides concessions for small cars while retaining incentives for hybrids. Society of Indian Automobile Manufacturers (SIAM) and Suzuki have previously advocated for exemptions in this policy. For example, in a 1 July media report, SIAM advocated against the previous draft of the CAFE standards, calling it “aggressive” and a “threat to the critical manufacturing sector”. Meanwhile, in a 4 July statement, Maruti Suzuki sought exemptions for small cars from the CAFE standards. It argued that the current framework allowed larger vehicles to pollute more while smaller ones faced stringent conditions.
The Society of Indian Automobile Manufacturers (SIAM) pushed back against the proposed Corporate Average Fuel Efficiency (CAFE) III standards calling it “too aggressive,” as reported in a 1 July Bloomberg article. The proposed standards aim to reduce vehicle emissions by a third from 2027. SIAM argued that this move could impact the sustainability of the automobile industry, and called for a reduction target of 15% instead.
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