India's auto industry seeks changes to draft CAFE-3 fuel efficiency norms

India's automobile industry is seeking changes to the draft CAFE-3 fuel efficiency norms, calling for relaxed targets and higher incentives for electric vehicles (EVs), even as manufacturers remain divided over concessions for small cars. The outcome of these discussions could influence technology investments, vehicle mix and competitiveness over the next decade.

Automakers are concerned about the September draft of the corporate average fuel efficiency (CAFE) rules, which tighten efficiency targets, introduce annual improvement requirements, and revise incentive structures across EVs, hybrids and flex-fuel vehicles. The Society of Indian Automobile Manufacturers (SIAM) is expected to raise these issues with the Union heavy industries ministry, according to a report by Mint.

While stricter norms support emission reduction, carmakers argue that the pace and design of the targets could raise costs and disrupt product cycles. One key demand is higher 'super-credits' for zero-emission vehicles and a review of annual targets, which the industry says are operationally unviable.

The industry is split on proposed relaxations for small cars under 909kg and under four metres in length. These concessions would largely benefit Maruti Suzuki, whose portfolio is dominated by compact models. Other manufacturers have opposed special treatment, noting that the draft already proposes a relaxation of up to 9g CO₂/km for small cars in fleet calculations.