Kolkata: A study by the Indian arm of Nomura Research Institute, the largest economic research and consulting firm in Japan, has said that India's policy on fuel efficiency norms for new cars penalises small ones with disproportionately stringent CO2 targets.
India's Corporate Average Fuel Efficiency (CAFE) norm's linear weight-based approach is also different from the graded regulations in other major car manufacturing countries, where smaller lightweight cars have relaxed emission norms.
"Globally, all major automotive markets including the US, China, Japan, Korea, and Europe offer regulatory protection to small cars under their CAFE frameworks due to their environmental and socio-economic value," the Nomura researchers said.
Maruti Suzuki has the biggest portfolio of small cars, with 10 models including Alto, Celerio, Wagon R, Swift, Dzire, Eeco and Fronx that weigh less than 1,000 kg and make up 65% of the domestic volumes for the company. Other automakers that have cars under 1 tonne are Renault (Kwid and Kiger), Tata Motors (Punch, Tiago and Altroz), Toyota (Glanza), Hyundai (Exter and i10 Nios), Citroen (C3) and Nissan (Magnite).
CAFE norms are set to get more stringent in 2027 and could push compliance costs of small cars beyond affordable levels.
Since the introduction of CAFE norms, prices of small cars have shot up due to the need for automakers to invest in technologies that improve fuel efficiency and reduce emissions. Sales of small cars (priced up to Rs 5 lakh) have fallen by 35% per year (compounded annual rate) between 2016-17 and 2024-25.