CAFE 3 Norms: Auto Industry Divided — Here's The Breakdown
If one looks at the proposed norms, overall small cars get CO2 deductions, super credits for cars with flex fuel engines, strong hybrid.
India's auto industry is at loggerheads over the proposed fuel efficiency norms.
In September end this year, the Bureau of Energy Efficiency published the revised draft Corporate Average Fuel Efficiency 3 norms for public feedback. The proposed norms, which are set to be implemented from 2027, are aimed at lowering emission levels and make vehicles more fuel efficient.
If one looks at the proposed norms, overall small cars get CO2 deductions, super credits for cars with flex fuel engines, strong hybrid. This has divided the industry, with Maruti Suzuki Chairperson RC Bhargava calling current norms in favour of bigger cars. The Tata Motors PV CEO said there should be no leniency for smaller cars. NDTV Profit breaks down the entire saga.
What Are CAFE 3 Norms?
Corporate Average Fuel Efficiency 3 norms are the proposed norms aimed at lowering emission levels and make vehicles more fuel efficient. The norms are proposed to kick in from 2027 in a phased manner and will be valid till 2032.
The norms are targeted to ensure that auto makers manufacture fuel-efficient cars in India. This is expected to ensure lesser CO2 emissions, thus resulting in lesser impact on the environment. Cutting fuel import and better value proposition car buyers are also possible.
History Of CAFE Norms In India
The CAFE norms were first introduced in 2017, under the Energy Conservation Act, 2001. As per the norms, the Fleet-Average Fuel Efficiency was set at 5.5 L/100 km. And the CO₂ Emissions Limit was set up to 130 g/km. CAFE 2 norms were introduced in 2022 which tightened various parameters. As per CAFE 2, the Fleet-Average Fuel Efficiency was set at 4.7 L/100 km. And the CO₂ Emissions Limit was set up to 113 g/km.
Impact On Auto Companies, Car Buyers ?
The proposed CAFE 3 norms have strict regulation on ensuring fuel efficiency and lesser CO2 emissions. This would result in more focus on R&D, finetuning engines and investing more in technology.
This would result in more cost for car manufacturers, which would ultimately reflect in final prices. While this would lead to buyers spending more money, but in the long run, with better fuel efficient cars, the users will have to spend less on fuel on an average.
What Are Proposed CAFE 3 Norms?
As per the draft, the CO2 emission target has been set at 91.7 g/km, and Fleet-Average Fuel Efficiency is set at 3.73 L/100 km, as per the weight of the car. For the first time, BEE has introduced weight based average.
"Considering the limited potential for efficiency improvements in petrol vehicle models with an unladen mass up to 909 kg, engine capacity not exceeding 1200 cc and length not exceeding 4000 mm, said motor vehicle model ‘i’ shall be eligible to claim, in addition to certified technology-based savings, a further reduction of 3.0 g CO₂/km in its manufacturer-declared CO₂ performance for calculation of performance under CAFE 2027," acccording to the draft by BEE.
Further the norms also offer incentives for flex fuel engine and smart hybrid cars.
Friction Point Among Industry
The main friction point between the industry is on weight based exemption of the car. RC Bhargava, chairperson of India's largest car maker Maruti Suzuki, in an interview to newspaper Business Standard supported the weight based exemption for smaller cars. He also called the current norms in favour of bigger cars.
The Other View
Shailesh Chandra, CEO of Tata Motors Passenger Vehicles, is of the view that no leniency must be granted to small cars in the proposed norms.
In post-results earnings call on Friday, Chandra said: "There has been an effort to define an arbitrary category of small car, basis weight.
"We do not support any move to include weight in the definition of small cars. Such an arbitrary criteria would conflict with one of the country's most critical imperative that is safety," Chandra added.
