Indian Carmakers Seek Extra Year To Meet Fuel Efficiency Rules: Report

Indian automakers are seeking an extra year to meet tighter rules on fuel efficiency, aimed at reducing carbon emissions, as the companies reel from the financial impact of COVID-19, sources told Reuters. The industry body leading the effort, the Society of Indian Automobile Manufacturers (SIAM), was 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, said one of the sources, who declined to be identified as they are not authorised to speak to media. SIAM did not respond to a request for comment. The road transport ministry said in a statement that it met officials from SIAM and their proposal was being considered but did not give details.

The corporate average fuel efficiency (CAFE) rules require automakers to cut carbon emissions through the launch of electric cars or vehicles that use alternative fuels. Carmakers have said it would be difficult to make further investments to meet the stricter rules, particularly when a drop in sales as the pandemic slowed demand has dented profits.

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

But doing so would allow India, the world's fifth-largest car market, to curb pollution, meet its carbon reduction targets under the Paris climate agreement and reduce its fuel import bill. In March, SIAM, whose members include top sellers Maruti Suzuki and Hyundai Motor, 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. 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 rules also aim to align Indian regulations for carmakers 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.

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