Most carmakers likely to fail at emission norms, face up to Rs 5800 crore in penalties

Car manufacturers in India could be facing a pile of penalties worth Rs 3,600 crore to Rs 5,800 crore if government-prescribed standards under the CAFE II (Corporate Average Fuel Economy) norms by the 1st of April 2023, which would involve the imposition of penalties on a carmaker’s entire fleet. Except for a few major companies like Maruti Suzuki India, Tata Motors, and MG, all other car companies could end up dealing with hefty penalties, an ET report states.
According to the Energy Conservation Bill passed last month, a carmaker would have to pay Rs 25,000 per unit if its fleet CO2 emissions exceed the targetted CAFE score by 0-4.7 grams per km and Rs 50,000 per unit if it exceeds by over 4.7 grams per km. Most companies’ actual CAFE score is likely to exceed the target score, the report adds.
The estimated cumulative penalty for carmakers is based on the annualised domestic sales of the top eight passenger vehicle makers that account for close to 85-90% of industry volumes. It can increase or decrease depending upon the changes in the product portfolio for the remaining fiscal. CAFE scores are computed in such a manner that they improve if an automaker increases the sale of electric and hybrid vehicles.

As automakers prepare for BS-VI phase 2 emission norms, the prices of the vehicles would also increase from April 2023. To comply with the new norms which would be the equivalent of Euro VI norms, both passenger and commercial vehicles would need more sophisticated equipment as standard. For example, the vehicles would need a self-diagnostic device, meant to monitor the vehicle’s emissions. The device would also monitor other emission equipment like the catalytic converter and oxygen sensors.