New Delhi: The debate within India’s automobile industry over the next phase of fuel efficiency norms has escalated to the Prime Minister’s Office (PMO), with JSW MG Motor India and Tata Motors Passenger Vehicles (TMPV) submitting separate representations opposing a proposed weight-based relaxation for small petrol cars under the upcoming Corporate Average Fuel Efficiency (CAFE-3) regime.
The two automakers have strongly objected to the proposal to introduce a new sub-category that would grant additional emission compliance relief to petrol cars based on vehicle weight. They argue that such a move would weaken the core objectives of the CAFE framework, slow India’s electric vehicle (EV) transition, compromise road safety, and distort competition in favour of select manufacturers.
According to documents reviewed by Business Standard, both companies have cautioned that introducing weight-linked exemptions would disrupt long-standing regulatory definitions that have guided vehicle design, product strategy and capital investment across the industry for more than a decade.
What Is the CAFE-3 Framework
Under the CAFE regime, automakers are required to meet fleet-level carbon dioxide emission targets, measured in grams per kilometre. Non-compliance attracts financial penalties imposed by the Bureau of Energy Efficiency (BEE), which operates under the Ministry of Power.
BEE released the first draft of CAFE-3 norms for FY28–FY32 in June 2024, inviting industry feedback. The Society of Indian Automobile Manufacturers (SIAM) submitted its consolidated response in December 2024. Subsequently, Maruti Suzuki separately sought additional relaxations for lighter petrol vehicles, exposing sharp differences within the industry.
In the revised draft circulated in September 2025, BEE proposed — for the first time — an additional 3 g/km CO₂ relaxation for petrol cars weighing less than 909 kilograms. This provision has now become the centre of the dispute.
Objection to Changing Long-Standing Definitions
JSW MG and Tata Motors have pointed out that “small cars” in India have historically been defined using length (below four metres) and engine capacity (below 1,200 cc for petrol) — parameters that are consistently used across taxation, safety and regulatory frameworks.
Introducing a new weight-based classification, they argue, would undermine regulatory consistency and disrupt product planning based on existing norms. Both companies warned that mid-cycle regulatory shifts reduce policy predictability and penalise manufacturers who made long-term investments assuming stable definitions.
Impact on EV Adoption and Climate Goals
A key concern flagged by the two automakers is the potential impact on India’s EV transition. The CAFE framework is designed to push manufacturers towards cleaner technologies across their entire portfolio, including electric vehicles and strong hybrids.
Granting targeted relief to internal combustion engine (ICE) petrol cars, they argue, would dilute incentives to invest in EVs, at a time when India is aiming for 30% EV penetration by 2030. EVs currently account for around 5% of passenger vehicle sales.
Both companies stressed that regulatory certainty is essential for India to emerge as a global hub for zero-emission mobility.
Concerns Over Market Distortion
Tata Motors Passenger Vehicles, in its submission, warned that the proposed 909-kg threshold could distort competition. According to its assessment, vehicles below this weight reportedly account for nearly 95% of the market share of a single OEM, raising concerns that the policy could disproportionately benefit one manufacturer.
TMPV also highlighted a potential conflict with the GST regime, under which petrol cars under four metres and 1,200 cc attract 18% GST, while larger cars are taxed at 40%. A separate weight-based category under emissions norms, it said, could create misalignment between taxation and environmental regulation.
Road Safety Risks Flagged
Both companies raised serious road safety concerns, warning that weight-based incentives could encourage manufacturers to remove critical safety features to qualify for emission relief.
TMPV noted that vehicles at or below the proposed 909-kg threshold do not currently achieve Bharat NCAP (BNCAP) safety ratings. BNCAP evaluates cars on adult and child occupant protection, pedestrian safety and safety-assist systems.
According to the companies, essential safety features — including reinforced body structures, side-impact beams, larger crumple zones and additional airbags — inevitably increase vehicle weight but are crucial for reducing fatalities and serious injuries.
Heavy Industry Investments at Stake
JSW MG, in its letter to the PMO, emphasised that the auto industry has invested over ₹1 lakh crore in building India’s EV ecosystem, including battery manufacturing, advanced cell technology and charging infrastructure.
These investments, the company said, are now beginning to show results, with EV sales recording steady growth. Any policy that indirectly favours petrol vehicles risks slowing this momentum and undermining investor confidence.
Appeal to the PMO
In their representations, both JSW MG Motor India and Tata Motors Passenger Vehicles have urged the PMO to reject weight-based CAFE concessions for petrol cars and ensure that CAFE-3 remains technology-neutral, predictable and aligned with safety and climate objectives.
They argued that emissions regulation should encourage cleaner mobility without compromising road safety, market fairness or long-term industrial strategy.
