Source The economics Times
NEW DELHI — In a significant pivot for India’s automotive policy, the Ministry of Power has withdrawn a proposed concession for small cars in its upcoming fuel-efficiency regulations. The decision, revealed in a revised 41-page draft on Friday, follows intense pushback from industry giants who argued the initial rules created an uneven playing field.
The scrapped “carve-out” would have granted leniency to petrol cars weighing 909 kg or less. This provision was widely criticized by competitors as a tailor-made benefit for Maruti Suzuki, which currently dominates roughly 95% of India’s small-car segment.
The Industry Rift
The controversy centered on the CAFE-III (Corporate Average Fuel Efficiency) norms, which are set to take effect from April 2027.
The Original Proposal: A September draft suggested that vehicles under 909 kg—such as the Maruti Alto and S-Presso—receive specific exemptions because they supposedly had “limited potential” for further efficiency improvements.
The Pushback: Rivals including Tata Motors, Mahindra & Mahindra, and Hyundai argued that these relaxations would allow certain manufacturers to avoid the expensive transition to electric or hybrid powertrains while their competitors faced steeper climb.
New Rules: No Weight Bias
The revised draft eliminates the 909 kg threshold entirely. Instead, the government has introduced a “substantially steeper reduction pathway” for all passenger vehicles. The primary goal is to shift the focus from theoretical laboratory efficiency to real-world gains.
“The new rules curb over-compensation for vehicle weight and aim to level the field between light and heavy fleet manufacturers,” the document stated.
Key Metric Current (CAFE-II) Target (CAFE-III by 2032)
Fleet Avg. Emissions 114 grams/km ~100 grams/km
With EV Credits N/A ~76 grams/km
Non-Compliance Penalty Varies Up to $550 per car
Accelerating the EV Shift
By removing the small-car cushion, the government is effectively forcing every automaker to rethink their powertrain strategies. Manufacturers can no longer rely on lightweight petrol engines to meet fleet-wide emission targets.
To avoid heavy penalties, companies will now be under immense pressure to:
Ramp up Electric Vehicle (EV) sales: The government’s target aims for EVs to reach 11% of total car sales by 2032.
Invest in Hybrids: Plug-in hybrids and strong hybrids will become essential “bridge” technologies.
Adopt Flex-Fuel & CNG: Alternative fuels will play a larger role in meeting the 100g/km limit.
The Consumer Impact
While the move is a win for environmental standards, it may spell the end of the “ultra-affordable” entry-level car. Analysts suggest that the cost of implementing cleaner technology or paying for emission credits will likely be passed on to the buyer, potentially making India’s most popular budget hatchbacks more expensive.
The Ministry of Power has not yet issued a final timeline for the formalization of these rules, but the draft signals a clear “green-at-all-costs” stance for the next decade of Indian motoring.
