7,300 Crore Penalty for 8 Automakers Over Emission Norm Violations

The Indian government has identified eight automobile manufacturers for exceeding the mandated fleet emission levels in the financial year 2022-23, potentially leading to penalties of approximately Rs 7,300 crore. According to a report by The Indian Express, the companies found to be in violation include major automakers such as Hyundai, Kia, Mahindra, Honda, Renault, Skoda, Nissan, and Force Motors.

Penalties and Violating Manufacturers

Among these, Hyundai is facing the highest penalty, exceeding Rs 2,800 crore, followed by Mahindra at nearly Rs 1,800 crore and Kia at Rs 1,300 crore. These fines stem from non-compliance with the government’s stricter emission regulations, which were introduced to curb the environmental impact of the automobile industry.

Stricter CAFE Norms Implemented in FY23

The Bureau of Energy Efficiency (BEE), under the Ministry of Power, introduced more stringent Corporate Average Fuel Efficiency (CAFE) norms at the beginning of the 2022-23 financial year. The revised standards mandated that carmakers achieve a fuel consumption rate of no more than 4.78 litres per 100 km and limit carbon dioxide emissions to 113 grams per kilometre. These new regulations were implemented to reduce the environmental footprint of passenger vehicles in India.

The enforcement of these tighter CAFE norms has led to some disagreements between automakers and the government. Manufacturers argue that since the enhanced penalty structure was only enforced starting January 1, 2023, applying it retroactively to the entire fiscal year is unjust. The automakers contend that the penalties should only apply to vehicles manufactured after the new rules came into effect.

In FY 2022-23, vehicles from 18 different automakers were tested under simulated driving conditions to assess compliance with the new regulations. Penalties were calculated based on the number of non-compliant vehicles sold throughout the year. Although the compliance report for FY 2021-22 showed that all 19 automakers adhered to CAFE norms, the report for FY 2022-23 is yet to be published.

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Understanding CAFE Norms and Their Impact

Introduced in 2017, the CAFE norms aim to reduce fuel consumption and carbon emissions from passenger vehicles. These standards apply to vehicles powered by petrol, diesel, LPG, CNG, hybrids, and electric batteries, with a weight limit of 3,500 kg. The regulations encourage the production of more energy-efficient and environmentally friendly vehicles, including electric vehicles (EVs) and hybrids.

Initially, penalties for non-compliance were capped at Rs 10 lakh under the Energy Conservation Act of 2001. However, a December 2022 amendment introduced significantly higher fines. Automakers are now liable for fines of Rs 25,000 per vehicle for minor deviations and Rs 50,000 per vehicle for significant non-compliance. Additionally, the Rs 10 lakh base fine remains applicable.

Under the compliance framework, automakers are required to submit their emissions data to the International Centre for Automotive Technology (ICAT) by May 31 each year. ICAT then compiles this data and forwards it to the Ministry of Road Transport and Highways and the Ministry of Power by August 31. This data submission process plays a crucial role in ensuring the enforcement of the CAFE norms.

As automakers face these new penalties, the Indian government remains committed to reducing carbon emissions and pushing for a greener, more sustainable automobile industry.