Automakers in India, led by the Society of Indian Automobile Manufacturers (SIAM), are opposing the government’s proposed plan to cut vehicular carbon emissions by 33% from 2027, citing concerns over industry sustainability and investment risks
India’s automotive sector is locked in a standoff with the government over proposed aggressive emission cuts under the third phase of the Corporate Average Fuel Efficiency (CAFE) norms. The proposal aims to reduce carbon emissions from cars by 33% starting in 2027, more than double the earlier target, prompting strong objections from industry players, according to a formal submission by the Society of Indian Automobile Manufacturers (SIAM) to the Ministry of Power.
The government’s intent is part of its broader climate strategy to curb greenhouse gas emissions and transition to cleaner mobility. India, one of the world’s largest emitters and home to a $137 billion automobile industry, introduced CAFE norms in 2017 to reduce oil dependence and environmental impact.
SIAM’s internal note, accessed by Bloomberg News, warns that the new target may trigger billions of rupees in penalties, threaten future investments, and destabilize a sector that is crucial for India’s manufacturing and employment base.
A high-level meeting is scheduled for July 2 in New Delhi, where automakers are expected to present their stance directly to Transport Minister Nitin Gadkari.
Key Points from the SIAM Submission:
- The industry proposes a more moderate 15% reduction, instead of the 33% cut.
- SIAM argues that India’s methodology for measuring fuel efficiency could artificially inflate emissions figures.
- Automakers also demand a 14.3% emission adjustment for vehicles using E20 fuel, a blend containing 20% ethanol.
- Similar benefits are sought for biogas-powered vehicles.
- SIAM suggests creating a carbon trading system, allowing overperforming companies to trade excess credits with underperformers.
The regulatory divergence in treatment of small versus heavy vehicles is another point of contention. This may benefit companies like Maruti Suzuki India Ltd., which dominates the lightweight car segment and is investing in CNG and hybrid technologies, along with its ally Toyota Kirloskar Motor Pvt. Ltd..
However, SIAM insists on maintaining a unified standard, arguing that fragmented norms may disrupt policy cohesion and tilt benefits unfairly.
The government’s proposal to ban sales of petrol and diesel vehicles by 2040 has also drawn criticism. SIAM cited Europe’s recent reconsideration of its 2035 fuel car ban as evidence that India must adopt a flexible and realistic roadmap, particularly given challenges in charging infrastructure and EV affordability.
As India balances its climate commitments with industrial sustainability, the auto sector’s response will be crucial in shaping a feasible path forward for clean mobility and economic resilience.