Easier emission rules for small cars? It's in consideration.

During a meeting of the industry lobby group Society of Indian Automobile Manufacturers (Siam) held on Friday in the national capital, a compromise was reached that the December submission of the industry sent to the government on the third edition of the so-called Corporate Average Fuel Efficiency (Cafe 3) norms will be retained, but with an additional proposal on possible relaxations for small cars as well as some light commercial vehicles, two people aware of the matter said on the condition of anonymity

Representatives from member automakers like Maruti Suzuki India Ltd, Tata Motors Ltd and Mahindra and Mahindra Ltd, among others, agreed to refer the matter to the chief executive council of Siam, which will now deliberate on the technical details.

While Maruti presented its case for a need to relax norms for small cars, other automakers provided a united opposition to the market leader at the meeting.

After hard negotiations, the lobby group agreed to work on a proposal in the form of an addendum to the December submission, which will be incorporated if it gets accepted by all companies. Siam takes all its decisions by consensus.

“Now, all the members will study and come back with their suggestions on the addendum. There has been no clear timeline set, but the process should conclude soon," the first of the two persons cited earlier said.

Queries sent to Siam remained unanswered till press time.

Maruti Suzuki, which sells nearly every second car in India thanks to its portfolio of small and compact vehicles, has sought specific relaxation for cars weighing under a tonne in the upcoming Cafe 3 emission norms. This comes after all automakers, including Maruti, had sent the government a unanimous proposal in December for a uniform relaxation of emission norms for all carmakers.

“Siam would like to re-iterate that the proposed norms of BEE (Bureau of Energy Efficiency) are too aggressive and risk the sustainability of the Indian Auto Industry," the industry wrote in its December submission.

Cafe 3 rules, set to take effect from April 2027, aim to slash the average carbon dioxide (CO2) emissions of new passenger vehicles. The proposed target is a fleet-wide average of 91.7 grams of CO2 per kilometre for a typical vehicle weighing around 1,170 kg. The proposed norms allow a comparatively higher CO2 emission target for heavier vehicles than lighter vehicles, which is being disputed by Maruti.

Cafe 3 norms place a cap on the average carbon dioxide emissions of a carmaker’s entire fleet, which is currently set at 113 grams per kilometre.

Chairman of Maruti Suzuki RC Bhargava has publicly said the norms are punishing smaller cars and favouring bigger ones.

Siam data shows that domestic sales in the mini segment (cars up to 3.6-metres in length) fell from 460,772 units in FY19 to 133,397 in FY25, a 71% decline. Maruti's sales in the mini segment fell from 368,990 units in FY19 to 125,770 units in FY25, a fall of 66%.

Shailesh Chandra, president of Siam, and managing director of Tata Motors’ passenger vehicles business, acknowledged during an industry event on 15 July that the view on December consensus of some players had changed.

“Of late, we have seen certain manufacturers have formed a different view (on Cafe-3)," Chandra said, adding that the December 2024 consensus was reached after months of deliberations among automakers.

However, he struck a cautious note when asked whether the December consensus will be completely reworked. “We will have to follow the process and basis that we can say if there is a change or not," he said.

As per the two persons cited earlier, the industry has pushed for the retention of the consensus, which was reached after at least 6 months of negotiations among all the members of the automakers.

After much deliberations, an agreement was reached on working on an addendum on relaxations as the government had asked for Siam’s recommendations on the issue in June.

The government has also asked its own agencies to study the issue. Mint reported on 10 July that the Bureau of Energy Efficiency, which is tasked with finalizing Cafe 3 and 4 norms, is studying the viability of easing these emission norms for small cars, the second person quoted above said.