Indian carmakers renew bid to delay tougher fuel efficiency rules -sources

Reuters 3 min read


Indian automakers are making a renewed push for more time to meet tighter rules on fuel efficiency, aimed at reducing carbon emissions, as companies still reel from the financial impact of COVID-19, sources told Reuters.

The industry body leading the push, the Society of Indian Automobile Manufacturers (SIAM), is expected to meet the transport minister on Tuesday to seek a one-year delay in complying with the rules, due to take effect from next April, said the sources, who have direct knowledge of the plans.

The grouping is expected to describe how the auto industry plans to adopt clean technologies in future, said one of the sources, who declined to be identified as they are not authorised to speak to media.

SIAM did not immediately respond to a request for comment.

 The corporate average fuel efficiency (CAFE) rules require automakers to cut average carbon emissions, turning to strategies such as launching electric cars or vehicles using alternative fuels like ethanol.

Carmakers have said it would be difficult to make further investments to meet the stricter rules, particularly as profits have been hit by slumping sales over the last two years as the pandemic has slowed demand.

But doing so would allow India to curb pollution, meet its carbon reduction targets under the Paris Accord and reduce its fuel import bill.

In March, SIAM, which includes top sellers Maruti Suzuki (MRTI.NS) and Hyundai Motor (005380.KS) among its members, had sought a two-year delay.

At the time, a senior government official said an extension was unlikely, but some concessions could be considered if car companies showed serious intent to invest in clean technologies. read more

India introduced a first phase of its CAFE measures in April 2017, giving carmakers until the end of March next year to cut carbon emissions from new cars to 130 grams per km.

In a second phase starting from April 1, 2022, India has proposed a further cut to 113 grams per km.

The stricter CAFE rules also aim to pull Indian regulations for carmakers in line with global standards.

Sales of hybrid and electric vehicle have increased in Europe, for example, where carmakers face heavy penalties if they do not develop low-emission technology.

But India has not yet set penalties for companies that fall short of its stricter CAFE norms.

Reporting by Aditi Shah; Editing by Clarence Fernandez