A high-level meeting is reportedly scheduled at the Prime Minister’s Office tomorrow, February 25, to finalise the next phase of India’s Corporate Average Fuel Efficiency (CAFE) standards that have come to sharply divide the auto industry, sources in the know of the matter told The Statesman.
The deliberations come amid intense lobbying from multiple stakeholders, with sections of the auto industry seeking relaxations and extended timelines, citing cost and technology transition challenges. On the other hand, energy experts and environmental groups are pushing for tighter norms to align with India’s climate commitments and long-term energy security goals. The outcome of the meeting is expected to set the direction for India’s vehicle efficiency and decarbonisation pathway over the coming years.
The latest is the third draft of CAFE-3 norms in the past two years. The proposed norms have been mired in a tough tussle between auto majors looking to influence the policy in their favour, which ultimately led the Prime Minister’s Office (PMO) to intervene. The Prime Minister’s Office has roped in several ministries in the decision-making process, including the Petroleum and Heavy Industries ministries, the Ministry of Road Transport and Highways, and the Power Ministry.
CAFE norms are standards set by the government regarding a minimum average fuel efficiency and maximum CO2 emission level – not for individual models of four-wheelers, but for the entire fleet of an auto manufacturer.
According to experts, there are three major lobbies flexing to tilt the balance in their favour and the core issue is transition to non- or less- polluting battery electric vehicles (BEV) from the current regime of internal combustion engines (ICE). “The small car segment, which is the biggest chunk of vehicles in India, is one lobby; the second is the big car segment; these two are foreign manufacturers. The third segment is the Indian manufacturers who are pushing the sales of EVs. The point is, CAFE norms, if not tuned to push EV adoption, would be a failed exercise. It is like India is ready to transition to computers, and we want to keep it stuck on the typewriters,” an expert associated with the deliberations told The Statesman.
According to reports, while the Bureau of Energy Efficiency (BEE) wants to do away with derogation or relief for small car makers, the pushback from the latter is immense, since the new norms would hit their sales and push up the prices of entry-level petrol cars, as higher costs would be involved in cutting back emissions and pushing up mileage.
The new norms are actually designed to push EV adoption among the lower segments of car users, since they account for the majority of four-wheelers, thereby pushing mass shift to EVs. The proposed norms make it difficult for smaller vehicles to adhere, compared to larger SUVs. This issue is essentially encompassed in the debate over weight-based emission concession for small cars, something that majors such as Tata and Mahindra have opposed tooth and nail.
According to InfluenceMap, a UK-based independent think tank producing data-driven analysis on how business and finance are impacting climate crisis, which maps climate policy engagement of the ten largest automakers operating in India and the automaker’s primary industry association, the Society of Indian Automobile Manufacturers (SIAM), the think tank suggests that Mahindra & Mahindra and Tata Motors have the most positive climate advocacy and the two account for the highest current and future BEV production in India.
On the other hand, “Japanese automakers with zero per cent current BEV production in India have pushed for policies promoting a longer-term role for ICE-powered vehicles over BEVs, led by Maruti Suzuki. Maruti Suzuki, Honda, and Toyota also appear to have urged the Indian government to adopt policies favouring ICE-powered hybrids over prioritizing BEVs…”
The think tank points out that India leads in electric two- and three-wheelers, but electrification of cars has lagged behind. Even as year-on-year sales have increased at a healthy rate, the absolute numbers show a dismal picture.