The Indian government has found that eight leading carmakers, including Hyundai, Kia, Mahindra, and Honda, exceeded the mandated fleet emission levels for the financial year 2022-23. This non-compliance could result in hefty penalties totaling approximately Rs 7,300 crore.
Hyundai faces the highest penalty, amounting to Rs 2,837.8 crore, followed by Mahindra (Rs 1,788.4 crore) and Kia (Rs 1,346.2 crore). Other manufacturers penalized include Honda (Rs 457.7 crore), Renault (Rs 438.3 crore), Skoda (Rs 248.3 crore), Nissan (Rs 172.3 crore), and Force Motors (Rs 1.8 crore).
The penalties stem from violations of the Corporate Average Fuel Efficiency (CAFE) norms set by the Bureau of Energy Efficiency (BEE) under the Union Ministry of Power. For FY23, automakers were required to achieve a fuel consumption rate of no more than 4.78 litres per 100 km and limit carbon dioxide emissions to 113 grams per km.
Stricter norms cause discontent
The CAFE norms, initially introduced in 2017 to regulate fuel consumption and carbon emissions in passenger vehicles, were tightened at the start of FY23. This included steeper penalties for non-compliance.
Automakers, however, argue that the revised penalty structure only came into effect from January 1, 2023, and therefore, applying it retroactively to vehicles sold throughout the year is unfair. Despite their concerns, the government calculated penalties based on all units sold during FY23.
The penalties have significant financial implications for the carmakers. For Hyundai, the fine represents nearly 60% of its FY23 profit of Rs 4,709 crore.
In FY23, the BEE tested models and variants from 18 automakers in accredited labs under simulated driving conditions. When specific models failed to meet the CAFE standards, penalties were calculated for the total number of non-compliant vehicles sold during the year.
While the compliance report for FY22 showed all 19 carmakers adhered to emission norms, the report for FY23 is delayed by over a year and remains unpublished.
The CAFE regulations apply to passenger vehicles under 3,500 kg running on petrol, diesel, CNG, LPG, hybrids, or electric power. Automakers breaching the norms currently face fines of Rs 25,000 per vehicle for exceeding fuel consumption by up to 0.2 litres per 100 km, and Rs 50,000 per vehicle for exceeding this threshold. An additional base penalty of Rs 10 lakh is also levied.
