India may ease small car fuel norms amid SUV boom, Maruti could benefit: Report
Maruti Suzuki has had a commanding position in the small car segment for decades, with vehicles such as the Alto and WagonR leading the charge Notify me
In a potential policy pivot, the Indian government is considering easing fuel efficiency norms for small cars to counter declining sales in the budget segment. The move follows lobbying efforts by Maruti Suzuki, India's largest carmaker, which has seen its entry-level car sales shrink in the face of a booming SUV market, a report by Reuters stated, citing multiple industry and government sources.
Small cars losing ground
Maruti Suzuki has had a commanding position in the small car segment for decades, with vehicles such as the Alto and WagonR leading the charge. However, consumer preferences and trends have all changed rapidly. Before COVID-19, small cars accounted for nearly two-thirds of Maruti Suzuki's sales, but this has now dropped to below 50 per cent out of the 1.7 million cars it sold in FY2024–25. The fall-off in this segment is emblematic of the wider automotive shift in India, with compact and mid-size SUVs representing the bulk of new car purchases.
Also Read : Maruti Suzuki India eyes 4 lakh exports in FY26 to counter domestic market slowdown
The government, too, is reportedly concerned about this trend. A senior official told Reuters that sliding demand in the affordable segment could hurt the overall growth of the passenger vehicle industry and limit mobility access for India's lower-income consumers. Proposed norms target sub 1,000 kg cars
Under India's current Corporate Average Fuel Efficiency (CAFE) regulations, permissible CO₂ emissions are tied to a car's weight. To comply, automakers must maintain fleet-wide efficiency, often by pushing electric or low-emission models. The proposed revision would ease emission targets specifically for cars weighing under 1,000 kg—offering regulatory relief to companies with a sizable share of small vehicles.
Maruti Suzuki, with 10 of its 17 models under this threshold, would be the biggest beneficiary. Hyundai, Renault, Toyota, and JSW MG Motor also sell lightweight models and may gain from the relaxation, though none have formally responded to requests for comment, according to Reuters. Industry pushback
The Ministry of Heavy Industries held a closed-door meeting on June 17 with automakers including Tata Motors, Mahindra & Mahindra, and Volkswagen to discuss the possibility of granting small cars more leeway under the upcoming fuel efficiency norms, which are due to take effect in April 2027.
However, some automakers are reportedly uneasy. Four sources told Reuters that such a move could disrupt the previously agreed industry consensus on emission standards and potentially grant Maruti an unfair advantage in the market.
Also Read : Renault Kiger, Kwid and Triber get benefits of up to ₹ 40,000
Venkatram Mamillapalle, country head of Renault India, told Reuters that the company trusts India's auto industry body to "represent the collective voice of the industry that benefits all stakeholders." Environmental trade offs
The sustainability report for 2024, by Suzuki Motor Corporation, Maruti's Japanese parent company, said small cars are environmentally sound—not just because they are driven less and, therefore, happier, but it also consumes less material and energy during production.
While the environmental merits of small cars are not in dispute, applying differentiated norms based on size or weight was not part of earlier consultations, four industry sources told Reuters. If implemented, this shift could reshape the policy landscape and affect how future fuel efficiency standards are negotiated.
Get insights into Upcoming Cars In India, Electric Vehicles, Upcoming Bikes in India and cutting-edge technology transforming the automotive landscape.
First Published Date: 29 Jun 2025, 08:30 AM IST
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Time of India
13 minutes ago
- Time of India
From Tatkal bookings for trains to ATM fees: Big changes coming in July 2025 - All you need to know
This is an AI-generated image, used for representational purposes only. The month of July 2025 is set to bring significant financial and service-related changes for Indian consumers, especially affecting train travellers and bank customers. These key shifts, from Aadhaar-based Tatkal ticket booking to new banking fees, could impact your daily transactions and travel plans. Here are the big changes applicable from the month of July: Aadhaar mandatory for online Tatkal bookings Starting July 1, Indian Railways will make Aadhaar authentication compulsory for booking Tatkal tickets online via the IRCTC website and mobile app. Travellers will need to link and verify their Aadhaar with their IRCTC profile to be eligible. A stricter Aadhaar-based OTP verification will come into effect from July 15 for all Tatkal tickets booked online. Additionally, authorised agents will be barred from booking Tatkal tickets during the first 30 minutes of the booking window. Even Tatkal tickets booked at PRS counters and through agents will require OTP verification from mid-July. Axis Bank revises ATM and account charges Axis Bank will implement revised charges across savings, NRI, and Trust accounts starting July 1. Customers exceeding their free transaction limits at Axis and non-Axis ATMs will now be charged Rs 23 per transaction, up from Rs 21. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Adidas Three Shorts With 60% Discount, Limited Stock Available Original Adidas Shop Now Undo This will apply to all financial transactions such as withdrawals and balance inquiries, beyond the free quota. Small Savings changes The government is set to announce the interest rates for small savings schemes, which will take effect during the quarter from July to September, reported ET. ICICI Bank to roll out new service fees ICICI Bank will also enforce a new set of service charges beginning July 1. According to ET, ATM users in metro cities will get three free transactions at non-ICICI ATMs, while non-metro customers will get five. Beyond these, Rs 23 will be charged for financial transactions and Rs 8.50 for non-financial ones. Other revisions include Rs 125 per international ATM withdrawal and updated fees for IMPS transfers. Cash transactions will be limited to three free branch/CRM uses a month, post which Rs 150 will be levied per transaction. With these sweeping changes across sectors, customers are advised to update their Aadhaar details, review their bank's updated charges, and complete necessary activations to avoid disruptions. Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
Economic Times
23 minutes ago
- Economic Times
Need a machete, not a memo: NITI Aayog's Arvind Virmani on why MSME reform needs more than new laws
Arvind Virmani says that one of the roles of NITI Aayog is to get information that the ecosystem is completely unaware of and therefore not searching for. Arvind Virmani, Senior Economist and NITI Aayog Member, uses the analogy of a jungle to explain that the 'jungle of control' cannot beeliminated just by changing the laws for the MSME (micro, small and medium enterprise) sector. Although the governments have made efforts to reduce the time and cost of compliance, there is still a long journey ahead, he notes. In an exclusive interaction with ET Digital, Virmani talks about the crucial role of states, the advancement made by Southeast Asian countries, the future path for Indian MSMEs to become global champions, and more. Edited excerpts: Economic Times Digital (ET): The MSME sector in India plays a crucial role in the country's economic growth. Despite various government schemes, why do Indian MSMEs continue to face challenges in scaling their operations? Arvind Virmani (AV): There are two sub-segments in the SME segment. There are SMEs, which are basically 10 or more workers, and there are household and micro enterprises. We call them micro, but within them, the household part is much larger at 80-90%, which are just one-person terms of the issues that they face, one is basic infrastructure, which applies to both these two categories. The general point is that just the basic infrastructure in industrial areas is not up to the we think of urban development and cleanliness, we think of residential areas, but to get enterprises of high quality and functioning at the levels we expect, the basic infrastructure has to exist. They cannot be worrying about overflowing sewage pipes every other day if they are getting people from outside to buy things or getting an export order. The second is land use laws. For example, the conversion of agricultural land into industrial land: how will you get entrepreneurs in rural areas if that process is very difficult? The third is demand risk; a lot of small enterprises are single products, single buyer profiles. So, the risk is higher. So, when we say—why can't they get credit easily it is because they are riskier; due to their small scale, they are restricted. And finally, the critical one which is overlooked is the level of skills. The skill part has been neglected for decades, but I think it's getting more attention now, and one of my efforts has been to make sure the quality of that is improved. ET: A large portion of small businesses in India operate informally. Do you see the informality as a symptom of over-regulation, or is it more due to a lack of incentives to formalise?AV: So, this links us back to those two sub-segments: 10 or more workers versus 10 or less; so less than 10 is informal. So again, if laws, rules, and regulations are more complicated, procedures also reflect that. But efforts have been made to simplify the laws and rules, digitise the forms, and comply. But as I have asserted many times in the last several decades, the jungle of control, which was built up, just doesn't go away by changing the have to dig into every little thing. There's a whole structure that was built over 30 years of wrong policies, which is very hard to reverse. It's not just a matter of laws and rules; it's also how the whole system operates. So, with the analogy of a jungle, one has to go through every area and cut the jungle. And that's companies are more effective, and that is where the below 10 and more than 10 divide actually works; the compliances are lower for less than 10. That has the perverse effect of not wanting to grow. So, in that threshold, they just divide into two units. If they are going to go eleven, they will just divide up. In the longer term, this prevents you from attaining second type of cost primarily involves owner-managers, including SMEs, except for the highest, which we call the medium. They are owner-managers. So, their time is limited. If they spend more time on compliance, they will have less time for other things, including innovation, etc. So, there is a challenge, and the only way, and perhaps the best way, to do it is to reduce that time and other costs of has been the effort of the government, but it's a long road. And it also has to stretch it down to the states. Every state has to do its bit because much of this appliance actually happens at the ground level, at the local level, actually. That is the state's purview. ET: What steps is NITI Aayog considering to facilitate the transition from informal to formal structures for micro and small enterprises? AV: It is one of the roles of NITI Aayog to get information that the ecosystem is completely unaware of and therefore not searching for. So that is one, but also that applies to information to states and officials. One state may be doing better, but the other state is not aware of how it is done. Obviously, it depends on their own willingness and motivation as have independent states. So, supporting states and providing them with information is crucial. The other thing that we are doing is to build an index for investment. One of the initiatives that NITI is doing is to see how we can define the strengths and weaknesses of different states in attracting investment, infrastructure, and manufacturing. So that index is now in phase two and will be completed in the coming months. Once that index is ready, a state that is not doing well will have a roadmap to follow. They have a chance then to improve and, therefore, attract more investment and role of states is 100% integral. The ease of doing business, or what used to be called 'Inspector Raj', occurs at the local level, with those inspectors being responsible to the state government, not to the central government. So, clearly the role of the states is critical in attracting FDI in producing and exporting quality goods. To be in the international market, you must produce international-quality goods. ET: NITI Aayog's latest report on medium-sized enterprises highlights their vital contribution to India's GDP, particularly within the manufacturing sector. How can their potential be fully harnessed? AV: This is important because medium-sized enterprises are capable of advancing to the next level. That means the materials, equipment, tools, skill levels of those who run these things, knowledge and information of the owner manager—all that is of a certain quality. The medium-sized enterprises are the ones who are operating at a much higher quality and, in principle, have the potential to compete globally. For example, recently, we did a report at the NITI Aayog on hand tools. There were a whole bunch of hand tool manufacturers. They are in a whole different category. And those are the ones which will be this new medium sector. They have the capability to upgrade the quality chain because the gap is not so one would look at this medium sector in that context, that they are both labour-intensive and have the potential quality and competitiveness to compete are the ones who are capable of scaling. And then, of course, there is the 10 barrier, as well as the 100/300 worker barrier, among others. All these need to be simplified and made less onerous. ET: India's spending on R&D is among the lowest compared to its international counterparts. This is also applicable to medium enterprises. How can we bridge these gaps to foster the growth of MSMEs in general and medium units in particular? AV: The competitive system and export competitiveness are critical for R&D to happen. So, if there is too much protection in an industry, I would not expect anybody to do R&D. So, the first thing is, what is the incentive from their side to do R&D? Why do you do R&D? If you feel that a competitor is going to get something better, a product or a process, which will reduce the cost, and he'll be able to wipe you out. Or he'll produce a new product and get all the market away from you. So that is the basic driver of private sector R& issue is, what can the government do to facilitate it? This is indeed a controversial issue. I believe that we should bring back the R&D subsidy and give a focused subsidy to encourage it. I think it is still very important. Many countries across the world give incentives for R&D. We withdrew it because of a bad experience. I think we need to re-evaluate. ET: Many Asian countries have successfully scaled their SME sectors. What lessons can India learn from countries like Vietnam, Indonesia, or China? AV: This is a very important question. If you look at Southeast Asia in general, the big lesson is they went all out there to attract FDI. They laid out the red carpet for them to set up the supply chain. They didn't do this in one or two years; first they attracted the FDI, and when a large company with US supply chains came in, they rolled out the red carpet to help them build that supply is what has transformed them. That is what enabled them to surpass our per capita income. So, all the Southeast Asian countries who did that and did it successfully now exhibit a much higher gap in per capita income than us. So the big lesson is—FDI and supply chains; if you can get them even now, when things are so bad, it's a different world. That will be a huge driver for the medium and small there are 100 companies engaged in this activity nationwide, that means we have representation in 28 states. If every state brings in one anchor investor, it will transform manufacturing in every state in the next 10 years. We are progressing towards Atmanirbhar Manufacturing. So that is the lesson, a very clear lesson. ET: India was unable to capitalise as much as it had hoped in the China-Plus-One strategy. How can there be a turnaround for India, especially with some inherent strengths, such as a large market and demographic dividend on its side? AV: It is not true that we have not benefited. India is in the top three or five gainers, as per some studies. Some studies show we are third; others show we are fifth. In simple terms, the US imports from China have gone down; they have gone up from other countries, including Taiwan and Vietnam, which is always mentioned. Clearly all these studies indicate that we are the third-largest the question is, how can we gain more?Given our size, we should be gaining 10 times what we are now. So, that is the real issue, and that is connected to what I said about FDI and supply chains. But what is the policy we are pursuing? The policy is having FTAs with countries that are the source of FDI and demand for manufacturers. That is what the supply chain is all about. So, the FTA with the UK is done; the UK is one of the largest importers of manufactured goods in the world. The US and the EU are the top two if you treat the EU as a single the FTAs are part of our strategy to achieve this comprehensive and much bigger shift in the next 5-10 years; [we should] not just be satisfied with being number three or five; we should be number one by a big stretch. India's 64 million MSMEs are vital to India's goals as an economic powerhouse. However they are often constrained by issues relating to scale, diversification and digital infrastructure. Elevating their stature and empowering such businesses is crucial, especially in the context of unpredictable global trade dynamics at play. In this interaction, Niti Aayog member and senior economist Arvind Virmani tells ET Digital how MSMEs can learn from international peers, the role of medium enterprises in unlocking growth and what needs to change for small businesses to become global champions of the future. Watch this video for more. ET: What should the MSME sector's strategy be in the backdrop of recent tariff and trade developments, and how can they safeguard themselves in light of such an unpredictable economic landscape?AV: So, as we know, the tariff was suspended. And based on all the information that came in the next couple of weeks—a month or so after that—a lot of US companies were desperately looking for Indian suppliers of the same products. So, I think the opportunity is much greater than the threat. So, in engineering goods, in household items, and in many others, there were reports, textiles, and many other things; they were looking for suppliers in India. So, I think the advice is very clear. MSMEs should be out there. This is the time. Look for buyers. They are looking. Find them. The MSMEs who feel they want to expand—this is an opportunity. ET: What is your vision for Indian MSMEs over the next decade, and what must change for them to become global champions? AV: The spirit of the MSME sector is very clear. One is that we must not think only of the current situation that there is x demand and we will meet that demand; we must think of the future where we want to be and build for the future. Second is that the future means we are going to be Viksit. So, you must build for a Viksit quality. We cannot be satisfied with where we are today. If I am producing something which is 30% inferior to, say, a German or Japanese product in machinery, a machinery manufacturer must think that in five years, we must be at that quality, and they have to start doing that now. That applies to MSMEs. That applies to start-ups. The vision is that start-ups will drive this push for higher quality, the frontier of the MSME sector. They are going to be the new MSMEs. And they are the ones who will transform productivity and growth. And which is why so much emphasis has been placed on start-up infrastructure, funding, the fund of funds, etc. It's just a matter of connecting them to the that is the vision, actually. That is the future.
The Print
33 minutes ago
- The Print
Russia's Rosneft in early talks with Reliance to sell stake in India unit
But the talks are at preliminary stage and there is no guarantee that they may lead to a definite deal as valuation remains a sticky ground, three sources with direct knowledge of the matter said. Reliance has held preliminary talks for acquisition of Nayara, which will help it overtake state-owned Indian Oil Corporation (IOC) to become India's No.1 oil refiner as well as give a meaningful presence in the fuel marketing space. New Delhi, Jun 29 (PTI) Russian oil giant PJSC Rosneft Oil Company is in early talks with Reliance Industries for sale of its 49.13 per cent stake in Nayara Energy, which operates a 20-million tonnes-a-year oil refinery and 6,750 petrol pumps in India, sources said. Top Rosneft officials have visited India at least thrice in the last one year, including visits to Ahmedabad and Mumbai, for talks with potential investors. For Rosneft, which is looking to exit from Nayara due to western sanctions limiting its ability to repatriate full earnings from India operations, a potential buyer could be one who has substantial earnings overseas or is an international company – both of which could make quick overseas payouts for the stake. Being a large exporter of fuel, Reliance has substantial overseas income, the sources said. While emails sent to Rosneft for comments remained unanswered, a Reliance spokesperson said, 'As a policy, we do not comment on media speculation and rumours.' 'Our company evaluates various opportunities on an ongoing basis,' the spokesperson said. 'We have made and will continue to make necessary disclosures in compliance with our obligations under Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015 and our agreements with the stock exchanges.' Rosneft, which had in 2017 acquired Essar Oil in a USD 12.9-billion deal, is unable to get full financial benefits from its Indian operations, including repatriating earnings, due to international sanctions. Essar Oil was subsequently named Nayara Energy. The Russian giant sometime in 2024 decided to exit Nayara and began scouting for potential buyers. Alongside Rosneft, UCP Investment Group, a major Russian financial firm, is also selling its 24.5 per cent stake in Nayara. The rest of Nayara's ownership includes Trafigura Group (24.5 per cent) and a group of retail shareholders. If a deal is struck, Trafigura too may exit the venture within months on same terms, they said. The stake of Rosneft and UCP was offered to Reliance Industries, Adani Group, Saudi Aramco and state-owned ONGC/IOC combine among others. But the USD 20-billion valuation that Rosneft had put for Nayara was considered too steep a price by almost every potential investor. Adani Group politely declined the offer to invest in an oil refinery, which is considered a sunset business given the energy transition planned worldwide. Besides the asking price being too high, the conglomerate's understanding with French energy giant TotalEnergies, with whom it has stitched multi-billion dollar partnership in city gas and renewable energy space, also came in the way of investing in Nayara, the sources said, adding Adani had in its deal with TotalEnergies agreed to limit future investments in fossil fuel space to only natural gas. Sources said Saudi Aramco is a serious contender to take over Nayara as it will fulfil its long-desired ambition of having downstream presence in the world's fastest growing oil market. Aramco, the world's largest oil exporter, had previously agreed to invest in a giant oil refinery-cum-petrochemical complex that state-owned firms had planned to build in Maharashtra, but that project hasn't taken off due to land acquisition delays. It had in 2019 signed a non-binding agreement to buy a 20 per cent stake in Reliance's oil-to-chemical (O2C) business for USD 15 billion but the deal was called off two years later over valuation issues. Sources said Aramco too considers the USD 20 billion valuation too high. It wasn't known if talks between Rosneft and Aramco have progressed beyond initial contact. Nayara makes the most sense for Reliance, they said. Reliance operates twin refineries, with a combined capacity of 68.2 million tonnes per annum at Jamnagar in Gujarat. Its units are in the vicinity of Nayara's 20-million tonnes-a-year unit at Vadinar, Gujarat. Nayara will help it cross IOC's 80.8-million tonnes-a-year capacity to become No.1 refiner in the country. But more importantly, the 6,750 petrol pumps of Nayara would help it gain a meaningful share in the fuel retailing business. Reliance has just 1,972 petrol pumps out of 97,366 outlets in the country. 'Oil refining alone is not a profitable business. Unless you have marketing, you can never make money,' an industry official explained. Sources said for both Oil and Natural Gas Corporation (ONGC) and IOC, the valuation being sought by Rosneft is too high. For them the value of petrol pumps should not be more than Rs 3-3.5 crore per outlet. This gives a valuation of not more than USD 2.5-3 billion for the marketing network and similar value is what they see for the oil refinery, they said. But for Reliance, the value of the marketing network is more, perhaps Rs 7 crore per outlet (USD 5.5 billion). And given the synergies the combined operations of Jamnagar and Vadinar refineries can derive, the 20-million tonnes Nayara unit and its planned petchem unit could be worth another USD 5 billion, they said. Sources said since the start of talks, Rosneft has brought down the valuation to USD 17 billion but that too is considered too high by companies such as Reliance. However, no official deal has been confirmed, and Rosneft has not made a formal statement on the matter yet. PTI ANZ HVA This report is auto-generated from PTI news service. ThePrint holds no responsibility for its content.
