Modi government proposes lenient approach to CAFE III norms
What's the story
The Indian government has proposed a more lenient approach to fleet-wide carbon dioxide emissions under the Corporate Average Fuel Efficiency (CAFE) III norms. The new draft, shared with automakers, suggests a flatter curve for each of the five years starting from FY28. The revised targets are about 21% less stringent than those proposed in September last year.
Policy
No special exemptions for small cars
The new draft does not provide any special exemptions for small cars. This means that automakers with a high number of smaller, lighter vehicles in their portfolio won't get higher emissions limits based on vehicle weight. However, the flattened emission slope could result in more lenient targets for lighter vehicles and stricter ones for heavier models.
Credit trading
Draft introduces pooling mechanism for credits
The latest draft also introduces a pooling mechanism, allowing automakers to trade credits if they fall short of their CO2 emissions targets. It also allows them to buy credits from the Bureau of Energy Efficiency (BEE) itself. The cost per gram of CO2/km for such credits will be ₹2,500 for FY28, ₹3,000 for FY29, ₹3,500 for FY30, ₹4,000 for FY31, and ₹4,500 for FY32.
Upcoming discussions
Meeting with industry representatives scheduled next week
The implementation date for CAFE III is still April 1, 2027. However, automakers have expressed concerns about meeting this deadline unless the final notification is issued in the coming days. A meeting with industry representatives and officials from the ministries of power, heavy industries, road transport and highways is scheduled for next week to finalize these new norms.