Don't run small cars off the road: Why India's emission rules hurt the cars we actually need
This is in sharp contrast to how the rest of the world operates: US, China and South Korea follow a piecewise linear model, in which the line becomes horizontal for smaller, lightweight cars. Japan adopts a quadratic curve, which softens at the lower-weight range. Europe has corrected its mistake and now has a negative slope for the CAFE line, which means CO₂ targets for heavier, bigger cars are tighter than those for lighter, smaller ones. These regulatory structures are rooted in practicality, equity and environmental logic.India's contrary CAFE model can have serious on-ground implications. For many Indian households, a small car is not a luxury - it's a move toward dignity, convenience and road safety. A family using a two-wheeler bears the vagaries of weather. What they need is a four-wheeled solution that is covered, safe, reliable and affordable. With over 25 cr two-wheelers on our roads today, ensuring this shift is a national imperative. Two-wheeler riders account for 45% of road fatalities in India. A safe, affordable car could be life-changing for them - but is increasingly out of financial reach, with even the entry-level car price rising from about ₹2.5 lakh till about six years ago to about ₹5 lakh today.
It is not just about regulations but also about recognising the role small cars play in national development. Historically, in the journey of most nations transforming from developing to developed status, small cars have driven mass motorisation, expanded access to jobs and catalysed industrial growth. They offer a cleaner, safer and more inclusive form of mobility. Lightweight, fuel-efficient and less taxing on urban infrastructure, small cars have served not just individuals but the economy.
Unfortunately, India appears to be abandoning this path. Entry-level car sales have declined by 77% in the past eight years due to a combination of high taxation, rising insurance and compliance costs, and increasingly stringent regulations. With the proposed CAFE norms applying harsher targets to small cars, this segment risks further erosion. This is a systemic failure to safeguard equitable access to safe personal transport. We can think of modernising small cars, but we should never kill them. There's also an environmental contradiction at play. GoI's Mission LiFE initiative rightly emphasises mindful consumption, efficient use of resources and sustainable living. Small cars use fewer raw materials, consume less fuel, emit lower CO₂ and cause less wear on roads.India must adopt a regulatory and fiscal approach that recognises small cars as a distinct category - with lower taxation and easier compliance norms. If the regulatory burden continues to rise, we risk shutting out the majority of Indians from the mobility ladder.The objective of CAFE is to reduce fuel consumption and CO₂ emissions. But failing to protect vehicles that do both is not just ironic - it is environmentally and scientifically counterproductive.All OEMs must rise above individual commercial interests and support a regulatory course correction that serves the national interest. An insensitive approach to the mass segment cannot steer the future of India's mobility. It demands unified resolve, long-term thinking and policy alignment with the needs of our people.
The writer is former president, Society of Indian Automobile Manufacturers (Siam)
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.) Elevate your knowledge and leadership skills at a cost cheaper than your daily tea. Newton vs. industry: Inside new norms that want your car to be more fuel-efficient
India's gas dream runs on old pipes. Can a European fix unclog the future?
Engine fuel switches or something else? One month on, still no word on what crashed AI 171
Is gold always the best bet? Think again
Can this cola maker get back bubble valuation pricked by Ambani?
Stock Radar: Metropolis Healthcare breaks out from 2-month consolidation; likely to retest 2,000 levels
For risk-takers, it is time to review & reinvest: 5 mid-cap stocks from different sectors with upside potential of up to 38% in 1 year
These large-caps have 'strong buy' & 'buy' recos and an upside potential of more than 25%
Buy, Sell or Hold: Motilal Oswal raises target on SRF; Nuvama sees over 20% upside in Phoenix Mills
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Indian Express
a few seconds ago
- Indian Express
1 in 3 US smartphone imports now made in India, China's lead shrinks
India's share in US smartphone imports surged to nearly 36 per cent in the first five months of 2025, from about 11 per cent in 2024. China, which continues to dominate the product category, saw its share drop from 82 per cent to 49 per cent over the same period. India's growing share — now 1 in 3, driven largely by Apple iPhones — comes amid ongoing trade talks with the US. While smartphones are India's top export to the US by value, President Donald Trump has threatened a 25 per cent tariff on Indian-made iPhones. US smartphone imports from India jumped by over three times year-on-year to 21.3 million units between January and May this year, according to data from the US International Trade Commis-sion (USITC). In value terms (CIF), imports of Indian-made smartphones increased 182 per cent y-o-y to $9.35 billion, already higher than around $7 billion in the whole of 2024. In May, Apple CEO Tim Cook had said the company expects most iPhones sold in the US in the April-June quarter to have India as their country of origin. Roughly 20 per cent of Apple's global iPhone production capacity is now based in India. Meanwhile, China exported 29.4 million smartphones to the US between January and May — a 27 per cent y-o-y drop — valued at around $10 billion. China (49 per cent) and India (36 per cent) were followed by Vietnam with 8.3 million units exported, accounting for a share of 14 per cent. Apple doubled down on production in India in 2020, after the government announced its flagship Production Linked Incentive (PLI) scheme to support smartphone manufacturing in the country. Through its contract manufacturers, the company has been the biggest beneficiary of the scheme, which has helped it move some production away from China. While it started by making some of its older iPhones in India, Apple today produces all models, including the higher-end Pro range, in the country. Apple's pivot to India from China for US-bound exports has drawn criticism from Trump, who, in May, said he's told Apple's chief executive that he does not want the company to expand its manufacturing operations in India. 'I have long ago informed Tim Cook of Apple that I expect their iPhones that will be sold in the United States of America will be manufactured and built in the United States, not India, or anyplace else. If that is not the case, a tariff of at least 25% must be paid by Apple to the US. Thank you for your attention to this matter,' Trump had said in a social media post. However, Apple is unlikely to overhaul its India expansion plans in the near-term. In May, its contract manufacturer Foxconn informed the London Stock Exchange of a $1.49 billion investment in one of its India units, Yuzhan Technologies (India) Pvt Ltd. The new plant is expected to come up in Tamil Nadu, where Foxconn already has a major iPhone production base. There are some challenges though. Of Apple's latest official supplier list, in 2023, as many as 157 of the company's various vendors and suppliers manufactured in mainland China, up from 151 the previous year. The number of Indian suppliers was 14. People in the know say that number has now risen to 64, marking a slow but steady shift of Apple's supplier base to India. In a Lok Sabha reply on Wednesday, Union MoS for Electronics and Information Technology Jitin Prasada said mobile manufacturing units in India have increased to 300 in 2024-25, from just 2 in 2014-15. At the same time, production of mobile phones increased 28 times to Rs 5.45 lakh crore, while exports increased 127 times to Rs 2 lakh crore. 'Total FDI in field of electronics manufacturing in last 5 years (i.e. since FY 2020-21) is US$ 4,071 mn, cumulative FDI of US$ 2,802 mn has been contributed by MeitY PLI beneficiaries,' Prasada said. Aggam Walia is a Correspondent at The Indian Express, reporting on power, renewables, and mining. His work unpacks intricate ties between corporations, government, and policy, often relying on documents sourced via the RTI Act. Off the beat, he enjoys running through Delhi's parks and forests, walking to places, and cooking pasta. ... Read More Soumyarendra Barik is Special Correspondent with The Indian Express and reports on the intersection of technology, policy and society. With over five years of newsroom experience, he has reported on issues of gig workers' rights, privacy, India's prevalent digital divide and a range of other policy interventions that impact big tech companies. He once also tailed a food delivery worker for over 12 hours to quantify the amount of money they make, and the pain they go through while doing so. In his free time, he likes to nerd about watches, Formula 1 and football. ... Read More
Indian Express
a few seconds ago
- Indian Express
India not ‘tariff king', says Commerce Secretary Sunil Barthwal
Commerce Secretary Sunil Barthwal on Friday said that India can face competition and is not the 'tariff king', as India's average tariffs for the UK following the trade deal are set to drop to 3 per cent compared to the current levels of 15 per cent. Barthwal said at a press briefing that India and the UK have managed to strike the 'right balance between strengths and sensitivities', and that the government will begin capacity-building of exporters to make full use of the tariff concessions achieved in the UK trade deal. 'FTAs are done, but the gains from the concessions can only come through stakeholder involvement. We have got concessions in textiles, leather footwear and processed footwear sectors, where tariffs were as high as 70 per cent. Now, the Commerce and Industry Ministry will begin capacity-building of our exporters,' Barthwal said. Barthwal said that fears of dumping are unfounded, as the trade deal has rules of origin and product-specific rules in place to address such concerns, adding that the deal is expected to be ratified by the UK government within a year, as it must pass through both Houses of the British Parliament. 'The regulatory ecosystem between the two countries will also be improved. In this FTA, there are timelines as to when the mutual recognition agreement is supposed to be completed. This will improve certainty for businesses operating in both countries,' Barthwal said. Government officials said that India's major exports — from labour-intensive sectors like textiles, gems & jewellery, leather and footwear, machinery, pharmaceuticals, and processed foods — are set to gain a major edge with zero-duty access to the UK, improving the competitiveness of Indian goods in the UK market. 'The UK market opens up duty-free for nearly all Indian agri-exports, with just a few limited exceptions like pork, chicken, eggs, rice, and sugar. A golden opportunity for our farmers and agri-entrepreneurs to shine on a global stage,' the Commerce and Industry Ministry said. The ministry said India has safeguarded its sensitive sectors — dairy, cereals and millets, pulses, and vegetables to high-value items like gold, jewellery, lab-grown diamonds, and certain essential oils. 'Strategic exclusions also cover critical energy fuels, marine vessels, worn clothing, and critical polymers and their monofilaments, smartphones, optical fibres — a strong stand to protect farmers, MSMEs, and national interests,' the ministry said. Notably, India has opened 89.5 per cent of its tariff lines, covering 91 per cent of the UK's exports, and only 24.5 per cent of the UK's export value will enjoy immediate duty-free market access. 'Strategically important products — particularly those where domestic capacity is being built under flagship initiatives like Make in India and PLI — will see concessions over periods of 5, 7, or even 10 years with gradual tariff reduction,' the ministry said. Joint Secretary in the Ministry of Commerce and Industry, Darpan Jain, said that the UK has offered its best FTA deal to India compared to all its trade partners in services adding that the UK has provided comprehensive and deep market access in 137 sub-sectors. India has a trade surplus of around $6.6 billion with the UK, with exports of $19.8 billion and imports of $13.2 billion in FY25. Jain said the UK's commitments on mobility are comprehensive and the best in any FTA. 'The UK has provided an assured mobility regime for various categories of natural persons: Business Visitors (BV) for all sectors — 90 days in any six-month period; Intra-Corporate Transferees (ICT) for all sectors including partner and dependent — three years.' The ministry said that the UK has accorded Indian suppliers a legal guarantee to participate in the UK procurement market — worth approximately $122 billion — for procurements conducted at the Central level of government and certain utilities. India, similarly, opens up a market opportunity of $114 billion. 'For the first time, the UK agreed to take a binding commitment to provide non-discriminatory treatment to our suppliers under the UK's Social Value regime. The UK's threshold for goods and services is approximately Rs 1.6 crore; India's threshold is approximately Rs 5.5 crore. For procurement related to construction services, both sides have agreed to a similar threshold of Rs 60 crore,' the ministry said. A government official said that India has taken a complete carve-out for its MSME preferential procurement policy. 'With respect to the Make in India policy, access to UK suppliers is restricted to eligibility to participate as deemed 'Class-II local suppliers' in domestic tenders above the agreed thresholds. Indian suppliers will continue to receive preferential treatment as 'Class-I local suppliers' in the UK,' the official explained.
Indian Express
a few seconds ago
- Indian Express
Nagaraju asks banks to raise capital, lend more
Banks need to further step up lending to meet the economy's demanding growth requirements, and should not hesitate to explore multiple avenues to raise the capital needed, financial services secretary M Nagaraju said on Friday. He assured all necessary policy support to the lenders, and hinted at relaxations in the foreign direct investment (FDI) rules. Speaking to Financial Express Deputy Managing Editor Shobhana Subramanian at the FE Modern BFSI Summit here, Nagaraju said: 'We also actually need to look at reviewing the current FDI rules in the banking sector to enable Indian banks to raise more capital…more patient capital.' The FDI in private banks is currently capped at 74 per cent, whereas the limit is 20 per cent for public sector banks (PSBs); any single entity cannot hold more than 15 per cent in any Indian bank unless exemption is granted by the Reserve Bank of India (RBI). 'If foreign capital comes at a cheaper rate, I think we should welcome (it). Currently, it is 15 per cent (single entity cap), and if it can be more, the banks will be able to expand credit, that's the goal,' the DFS secretary said. He stressed the need to have sustained high growth in credit flows to the needy sectors of the economy, including MSMEs. As of June 27, 2025, credit offtake was up 9.5 per cent on year, lagging deposit growth of 10.1 per cent. Nagaraju's comments come at a time when the State Bank of India (SBI) has raised Rs 25,000 crore through qualified institutional placements (QIPs) to bolster its capital base, and other state-run banks among themselves are set to raise Rs 20,000 crore via this route in the current financial year. 'Credit growth is a little slower in this quarter, but we are expecting that it will pick up… we also want the banks to lend,' the official said. With large corporations flush with cash, credit growth is now largely directed at MSMEs, the secretary said. In March 2025, the aggregate capital adequacy ratio (CAR) of 46 major banks reached a record high of 17.2 per cent, but the credit flows haven't been exactly keeping pace with this, or the investment demand to the assisted via bank capital. With banks required to play a pivotal role in driving India's ambition of becoming a $30-trillion economy by 2047, he said bank credit to the private non-financial sector should reach around 130 per cent of the gross domestic product (GDP) from 56 per cent now. According to Nagaraju, banks and financial institutions need to explore and expand various avenues of raising capital, including conventional equity markets, issuance of Basel III-compliant AT1 bonds and tier 2 instruments. They could also explore innovative methods like tapping global financial hubs, green bonds, sustainability-linked loans and also foreign debt markets to fund domestic credit expansion. He also urged large incumbent banks to focus on capital conservation by reducing operational costs with the use of technology. Nagaraju said banks ought to reimagine deposit mobilisation and increase leverage and productivity, deepen digital and data capabilities, and build future-readiness in terms of ESG-resilience and governance. By advancing these strategic themes, Indian banks could actually transform themselves into stronger institutions, he said. 'Therefore, access to capital from all sources needs to be looked at and worked upon by all of us. We need multiple globally competitive large banks facilitating access to global funds, best talent and technical expertise,' he said. Currently, only two Indian banks — SBI and HDFC — are in the top 100 global banks by total assets, which is not enough, he said, drawing comparison to lenders in China and the US. On further consolidation of PSBs, he said the previous mergers have yielded good results. 'We would see that wherever the synergies are, we can always look at them (more PSB mergers).' Banks anchor inclusive growth by bringing the unbanked under formal financial systems, enabling millions through schemes like Pradhan Mantri Jan Dhan Yojana, Pradhan Mantri Jeevan Jyoti Bima Yojana, Pradhan Mantri Suraksha Bima Yojana, and more, he added.
