India trims fuel-efficiency penalties for automakers
Change
India reduced total penalties for nine automakers that missed Corporate Average Fuel Efficiency (CAFE-2) targets to Rs 2,728 crore for the FY23–FY25 period, replacing the earlier per-vehicle levy with a standardized Rs 37.5 lakh charge per original equipment manufacturer (OEM) for April–December FY23 and recalculating fines under the revised methodology.
Why it matters
Automakers must reconcile efficiency shortfalls through a mandated credit-debit registry to be maintained by a designated authority, placing record-keeping and trade obligations on manufacturers. Credits can be pooled and sold within prescribed three-year and two-year blocks, and unresolved deficits will remain subject to penalty recovery mechanisms ordered by the Prime Minister's Office.
Implications
- • Original equipment manufacturers' (OEMs') compliance teams must register with the designated credit-debit registry and maintain up-to-date credit and deficit records, because unoffset deficits will result in penalty payments.
- • OEM procurement teams must secure surplus fuel-efficiency credits from other manufacturers or pool internal credits within the defined block periods to avoid paying fines.
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