Tata Motors proposes changes to CAFE-II rules: Tata Motors Passenger Vehicles (TMPV) has recommended several modifications to India’s proposed Corporate Average Fuel Efficiency (CAFE-II) regulations, while supporting the introduction of a compliance credit mechanism. In a July 14 letter to Power Secretary Pankaj Agrawal, Tata Motors argued that a well-designed credit-debit system could help manufacturers meet fuel-efficiency targets if it rewards genuine over-compliance and maintains trust in the regulatory framework.
The draft amendments, circulated by the Ministry of Power, allow manufacturers exceeding fleet-average targets to earn compliance credits, while those falling short accumulate debits. Companies can trade credits among themselves or purchase them from the Bureau of Energy Efficiency (BEE) at a fixed rate. Tata Motors stressed that BEE should remain an independent regulator, not a seller of credits, to avoid conflicts of interest and ensure price neutrality.
Tata Motors also raised concerns about the proposed credit price of Rs. 2,500 per g CO₂/km, which is lower than the statutory penalty of around Rs. 5,000 for non-compliance. The company warned that this could reduce incentives for fuel-efficiency investments. Instead, it urged that manufacturers first source credits from over-compliant automakers through market transactions, with penalties applying only after those credits are exhausted.
Additionally, Tata Motors recommended allowing unused CAFE-II compliance credits to be carried forward beyond the FY2023-2027 cycle, unlike the current draft that lets them expire. The company believes such flexibility would support long-term planning. As the Ministry of Power consults stakeholders, these proposed changes aim to balance environmental goals with market realities, ensuring the CAFE-II framework remains both effective and credible.
