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Business Standard

Automakers clash over CAFE relief for LCVs, small cars at Siam meet

Automakers clashed over exemption demands under the upcoming CAFE norms at an internal meeting of the Society of Indian Automobile Manufacturers (Siam) on Friday. A CEO Council meeting is likely to be called to resolve differences regarding relief sought for light commercial vehicles (LCVs) and small passenger vehicles (PVs), Business Standard has learnt. The CEO Council, the apex body comprising the heads of all major automakers, is expected to take up key issues under the upcoming CAFE-3 and CAFE-4 regulations, including proposals to exempt N1 category LCVs (weighing less than 3.5 tonnes) and small PVs (weighing less than 1,000 kg). Both demands have triggered sharp divisions within the industry. During Friday's Executive Council meeting, senior executives from passenger vehicle makers debated the matter at length. While some strongly supported relief for N1-category LCVs, they opposed similar consideration for small PVs based on weight. Amid the disagreement, members suggested escalating the matter to the CEO Council if the industry is to revisit its current position. Once convened, the CEO Council is expected to deliberate on both exemption proposals, along with broader concerns over the feasibility of achieving the stricter CAFE targets set to take effect from April 2027. CAFE norms, short for Corporate Average Fuel Efficiency, are government-mandated fuel consumption standards that require auto manufacturers to meet fleet-wide average carbon dioxide emission targets based on vehicle weight and sales volume. These norms are designed to reduce oil imports and carbon emissions from road transport. Automakers that fail to meet the required targets are liable to pay penalties on a per-vehicle basis. The ongoing discussions between the auto industry, the Bureau of Energy Efficiency (BEE), the Ministry of Power (MoP), and the Ministry of Heavy Industries (MHI) are focused on the next two phases of these regulations—CAFE-3 and CAFE-4—which are scheduled to come into effect from April 2027 onwards. Each phase is expected to remain applicable for a five-year period, stretching the regulatory horizon to March 2037.