India trims fuel-efficiency penalties for automakers to Rs 2,728 crore
→OEM compliance teams must update penalty provisions and credit accounting
Change
India recalculated Corporate Average Fuel Efficiency (CAFE-2) non-compliance charges to Rs 2,728 crore for nine automakers covering FY23–FY25, applying a uniform Rs 37.5 lakh levy per original equipment manufacturer for April–December FY23.
Why it matters
The ministry will set up a designated credit-debit registry for each original equipment manufacturer (OEM) to track credits earned and deficits incurred, with surplus credits poolable and tradable within a three-year block followed by a two-year block. Manufacturers remain liable to pay penalties if they cannot offset deficits through purchased or pooled credits. The Prime Minister's Office has directed India's power and road ministries to establish a mechanism for recovery of imposed penalties.
Implications
- — OEM compliance teams must immediately update CAFE-2 compliance records and penalty provisions to reflect the revised Rs 2,728 crore calculation — failure to record correct liabilities exposes them to enforcement and payment obligations under the new methodology.
- — Finance and treasury teams at OEMs must secure liquidity or credit-purchase arrangements during the defined three-year and subsequent two-year credit block periods — manufacturers that cannot purchase credits remain legally liable to pay penalties.
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Source
View on Economic Times