A new study by Nomura researchers suggests India should ease its vehicle emission standards for small cars, arguing that current rules unfairly penalize lighter vehicles compared to global practices.
India’s Unique Emissions Challenge
India’s Corporate Average Fuel Efficiency (CAFE) framework follows a linear weight-based approach. This means that lighter vehicles are given much stricter emission targets.
This system stands in contrast to major auto markets like the US, China, Europe, and Japan. These regions often offer relaxed emission norms or “protection mechanisms” for smaller, lighter cars, recognizing their environmental and socioeconomic value.
Automakers in India, including market leader Maruti Suzuki, have been advocating for such changes, especially as sales of smaller hatchback cars have been declining.
Understanding India’s CAFE Norms
The Bureau of Energy Efficiency (BEE) introduced CAFE norms in India in 2017. Their primary goal is to regulate fuel consumption and carbon emissions from passenger vehicles weighing under 3,500 kg.
These norms apply to a wide range of vehicles, including those running on petrol, diesel, LPG, CNG, hybrids, and electric vehicles (EVs). The regulations were made stricter at the start of the 2022-23 financial year, with increased penalties for non-compliance.
The intent behind CAFE is to reduce India’s reliance on oil and cut air pollution. It encourages automakers to lower CO2 emissions and incentivizes the production of more carbon-friendly vehicles like EVs, hybrids, and CNG cars.
For FY 2022-23, car companies were required to achieve an average fuel consumption of no more than 4.78 liters per 100 km, equating to CO2 emissions of 113 grams per km.
The Discrepancy: Big vs. Small Cars
Nomura’s research highlights a key issue: India’s CAFE framework allows heavier vehicles more lenient absolute CO2 limits. This means a large SUV might have a higher permissible CO2 target, while a smaller car faces a much stricter one.
The study provides an illustrative example: a high-selling SUV with CO2 emissions of around 130g/km could be compliant, but a popular small car emitting just 100g/km might be non-compliant. This creates an imbalance where lower-emitting small cars are penalized.
Lightweighting, a crucial strategy to reduce CO2 emissions, is thus discouraged. Even if a car becomes more fuel-efficient by shedding weight, its stricter target under India’s current system means it might still fail to comply, especially for entry-level models.
Global Approaches to Emissions
Other major automotive markets around the world have adopted different approaches to avoid penalizing smaller cars:
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USA: Uses a piecewise linear approach. Below a certain vehicle size, the fuel economy target becomes constant, preventing it from getting infinitely stricter for smaller cars.
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China: Similarly, employs a piecewise linear method. For cars below a specific curb weight, the fuel consumption target is fixed, ensuring it doesn’t tighten indefinitely for lighter vehicles.
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South Korea: Maintains a constant fuel economy target for cars below a certain weight. Additionally, manufacturers get a 5-7g/km advantage in their CAFE performance based on the proportion of small cars they sell.
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Japan: Follows a non-linear approach to ensure that small, lightweight cars are not subjected to disproportionately high targets.
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Europe: Has gone a step further with a negative slope in its calculations. This means larger cars actually have a slightly lower absolute CO2 target, while smaller cars benefit from more relaxed targets.
Key Takeaways
- India’s CAFE norms penalize lighter, smaller cars with disproportionately strict emission targets.
- This approach differs significantly from major global automotive markets that provide regulatory protection or more relaxed norms for small cars.
- The current framework discourages lightweighting, a key strategy for reducing carbon emissions.
- Reforming India’s CAFE norms could align them with global best practices and support the small car segment.
The Nomura study highlights a critical area for policy review, aiming to balance environmental goals with the practical realities of India’s automotive market and consumer needs.
