Fuel-efficiency standards for passenger cars, or Corporate Average Fuel Efficiency (CAFE) norms, in India are relatively new being introduced in 2017. These standards were revised in 2022. CAFE norms, imposed on an auto company’s entire fleet, sets a limit on the total emission of CO2 by the company. The resistance by auto companies to improving efficiency and reducing the carbon footprint on the grounds of cost is evident from the standards for phase 1. Targets for CAFE 2 rolled out in April last year remain weak, a concession to auto companies that lobbied for a delay in rolling out the new norms on the ground that between investments to become BS6-compliant and the pandemic, companies were not able to make the requisite investments.
According to the International Energy Agency, India is expected to add at least 300 million vehicles to its fleet between now and 2040. Rather than lobbying to weaken efficiency norms, the auto sector must recognise the opportunity that stringent CAFE norms create. It should push companies to move away from internal combustion engines, and investing in electric vehicles and hydrogen fuel cell-powered vehicles. Leveraging demand and innovation to reduce costs, robust CAFE norms will give automakers access to new domestic and international markets. Stringent norms and implementation is a boon for the economy, the automobile sector as well as the environment.
