Automakers warn of billions in penalties over India's 'too aggressive' emissions rules

Economic Times

8 hours ago

Automakers are pushing back against India's proposed carbon emission limits and plans for new standards for lighter cars, terming the South Asian nation's use of regulation to stem planet-warming greenhouse gases as 'too aggressive.'
New Delhi's plan to cut car emissions by a third from 2027, more than twice the pace of its previous target, risks the sustainability of the industry, according to a note from the Society of Indian Automobile Manufacturers seen by Bloomberg News.
The document is part of discussions on the third phase of India's Corporate Average Fuel Efficiency norms, a set of rules first introduced in 2017 to reduce greenhouse gas emissions and dependency on oil imports. India is one of the world's largest releasers of greenhouse gases, and its $137-billion auto industry is a major contributor.The proposed steep cut risks billions of rupees in penalties and threatens future investments in one of India's most critical manufacturing sectors, the document, a formal submission by Siam to the power ministry, said.
A meeting with the government is planned for July 2 in New Delhi, where automakers will present their case directly to Transport Minister Nitin Gadkari, according to people familiar with the matter, who asked not to be named.
India's power ministry, heavy industries ministry and Siam did not respond immediately to emails requesting comments.The government is also proposing to apply different standards for small and lightweight cars versus heavier models and carmakers are resisting it, the people said. The approach could benefit companies like Maruti Suzuki India Ltd., which dominates the country's small car market and is investing heavily in compressed gas and hybrid technology.Still, the industry body will stick to a united position, the people said, adding that splitting standards by size would undermine policy cohesion and might unfavorably benefit a few players.
A lobby led by Maruti and Toyota Kirloskar Motor Pvt. is also arguing for hybrids, ethanol-blend models and gas-powered cars to get emission credit incentives comparable to those given to electric vehicles, the people said. Maruti and Toyota Kirloskar did not immediately respond to emails seeking comments.India is also floating the idea of ending sales of petrol and diesel vehicles by 2040, the document showed. This proposal has consistently faced resistance, with Siam warning that such 'drastic steps' would undermine both ongoing and prospective investments. The industry body points to recent developments in Europe — where regulators are revisiting their own 2035 fuel car ban — as proof that India needs a more flexible road map. 'Despite better charging infrastructure and higher EV penetration, even Europe is struggling to meet these targets,' the document said.As automakers and government officials discuss the proposals, the outcome could shape India's clean vehicle policy for years to come as the country tries to balance climate goals with economic growth and affordability for its 1.4 billion citizens.Here are other key submissions from the Siam note: India's plan to tweak how fuel economy is measured could inflate emissions on paper without accurately reflecting real-world improvements
Propose a more gradual 15% reduction target for emissions, instead of the planned 33% cut
Propose a 14.3% cut in how emissions are calculated for vehicles running on E20, a fuel blend that includes 20% ethanol
Also seeking similar cuts for biogas-fueled cars
Creation of a carbon trading system: allowing companies that outperform their targets to sell surplus emissions credits to others that fall short