CAFE-III norms: Why India’s biggest carmakers are at loggerheads with each other

The Bureau of Energy Efficiency’s (BEE) draft on the third phase of Corporate Average Fuel Efficiency (CAFE-III) norms has caused a rift in India’s auto industry. The Society of Indian Automobile Manufacturers (SIAM), an apex body representing all automakers, has failed to reach a consensus on a proposed weight-based exemption for small cars.

As per the BEE’s draft, cars with unladen mass of up to 909 kg, engine displacement of up to 1,200 cc and length of up to 4,000 mm (typical small petrol hatchbacks) get an extra 3 g/km CO₂ deduction in emissions performance calculation. The CAFE-III norms will be effective from April 2027 to March 2032.

While the draft CAFE-III norms have found the backing of Maruti Suzuki India Ltd, India’s biggest carmaker by volume, it has irked homegrown carmaker Tata Motors, which has argued that the weight criterion can lead to unsafe cars. Maruti Suzuki has the widest portfolio of small cars that fall under the 909 kg limit. However, Tata Motors’ smallest car, hatchback Tiago, weighs more than 909 kg.

Rahul Bharti, Senior Executive Officer, Corporate Affairs, Maruti Suzuki, says the weight metric is also followed in many other countries. “About 90% of the world’s automobile market, including China, the US, Europe, Japan and South Korea, provides structured relaxation on small cars,” says Bharti.

“China provides relaxations to cars weighing below 1,090 kg, Europe below 1,115 kg, Korea below 1,100 whereas Japan keeps making it easy for the smaller cars to reach CO2 targets. If the whole world is doing it, there must be some wisdom that these policymakers are following,” he says.

Bharti warned that small cars will have to be discontinued if these relaxations are not given to them. “If the (CAFE-III) targets become unjust, then just to meet CAFE regulations, a small car, which produces very low CO2, will have to be discontinued. That we don’t want. The targets should be realistic,” he says.

However, Tata Motors has called the inclusion of weight criterion in the CAFE norms as “arbitrary.”

“The intent of CAFE has been to drive OEMs to cleaner technologies at a fleet and portfolio level. We see absolutely no justification for any special concession for this specific category of cars. We do not support any move to include weight in the definition of small cars. Such an arbitrary criterion would conflict with one of the country’s most critical imperative: safety,” Shailesh Chandra, managing director and CEO of Tata Motors Passenger Vehicles, said in a media conference call after the company announced its second-quarter earnings.

Customer preference has and continues to shift towards cars that are safe and equipped with features, Chandra added. “Today, no car weighing below 909 kg meets B-NCAP safety ratings. So, encouraging lighter vehicles would undermine the significant achievements the industry has made in improving safety standards,” he argued.

“Regulations should not mean dissonance with evolving consumer preference because at some stage you have to align with it. And market trend clearly indicates that in the sub 4 metre space, consumers have shifted to compact SUVs and this shift reflects customer aspirations of safer feature-rich vehicles,” he claimed.

“While there has been an argument that light-weight cars are also affordable cars, the reality is that there are cars in the vicinity of 909 kg that retail for around ₹10 lakh. So, with minor weight reduction, maybe with removal of safety reinforcements, they can be brought within the weight criterion. And that would mean giving concession to relatively even expensive cars. Diluting emission norms based on weight criterion compromises on vehicle safety,” he stated.