Revamping CAFE Norms: A Boost for Small Cars in India
India is set to transform its vehicle emissions regulations with the introduction of new Corporate Average Fuel Efficiency (CAFE) norms, targeting support for small cars. These changes are crucial as the small car market has experienced a staggering 71% decline in sales over the past six years. The new CAFE 3 norms not only provide a framework for emissions pooling among manufacturers but also offer incentives for companies producing electric vehicles.
The Bureau of Energy Efficiency (BEE) released a draft of the CAFE 3 norms for public consultation. These regulations will apply to M1 category vehicles, which include passenger cars with a maximum weight of 3,500 kg. Car manufacturers will be required to meet specific emissions targets, failing which they will face penalties. This initiative aims to create a level playing field for small car manufacturers who have been advocating for relaxed emissions norms.
The CAFE 3 norms introduce innovative concepts such as emissions pooling, allowing up to three manufacturers to combine their emissions targets. This collaborative approach enables manufacturers to balance their fleet emissions while reducing compliance costs. Additionally, companies that sell electric vehicles will receive emissions discounts, further promoting the shift towards eco-friendly transportation.
One of the significant benefits of the CAFE 3 norms is the potential for lighter cars to meet emissions targets more easily. The efficiency formula incorporates the average fleet weight, encouraging manufacturers to develop smaller, lighter vehicles. The draft also suggests additional exemptions for small cars, particularly those with unladen masses of up to 909 kg and engine capacities not exceeding 1200 cc.
Recognizing the challenges faced by small car manufacturers, the Indian government is also reducing the Goods and Services Tax (GST) rate on small cars from 28% to 18%. This move is designed to make small cars more accessible to consumers and stimulate demand in a declining segment.
In summary, the proposed CAFE 3 norms represent a significant step toward enhancing the sustainability of India’s automotive industry. By supporting small cars and integrating innovative measures like emissions pooling, the government aims to not only improve air quality but also revitalize a crucial segment of the market. As manufacturers adapt to these new norms, the focus will shift towards producing lighter, more efficient vehicles that meet both consumer needs and environmental standards.
