BEE Revises Fuel-Efficiency Norms Offers Relief for Small Cars

Post by : Meena Rani

The Bureau of Energy Efficiency (BEE) on Thursday released revised draft fuel-efficiency norms for 2027-2037, offering special relief for small cars for the first time and incentives for flex-fuel and strong hybrid vehicles.

The revision follows intense debate within the Indian automobile industry. Maruti Suzuki had sought concessions for small cars under the CAFE-3 and CAFE-4 norms, while other manufacturers, including Tata Motors and Mahindra & Mahindra, opposed such preferential treatment.

Background: CAFE Norms and Previous Drafts

CAFE, or corporate average fuel efficiency, norms set targets for fleet-wide carbon-dioxide emissions or fuel efficiency, measured in grams of CO₂ emitted per kilometre (gm/km).

The BEE issued its first draft of CAFE-3 and CAFE-4 norms in June 2024. The Society of Indian Automobile Manufacturers (SIAM) had suggested amendments in December 2024, leading to industry consultations. Maruti Suzuki formally requested relief for small cars earlier this year.

Special Relief for Small Cars

Under the revised draft, “small cars” are defined as petrol vehicles weighing up to 909 kg, with engines of 1,200 cc or less and lengths not exceeding 4,000 mm—primarily entry-level hatchbacks and compact sedans. Maruti Suzuki, the country’s largest small car manufacturer, stands to benefit the most.

Small cars will receive a special credit: in addition to CO₂ savings achieved through certified technologies, they can subtract an extra 3 g/km from their declared emissions. For example, a small car saving 2 g/km via technologies such as start-stop systems or improved tyres can count 5 g/km toward CAFE compliance.

However, the benefit is capped to ensure fairness: “No small car model shall be permitted to claim a cumulative reduction exceeding 9 g/km of CO₂ in any reporting period,” the draft states.

Treatment of Hybrids and EVs

Earlier proposals by BEE suggested making compliance tougher for strong hybrids while easing requirements for EVs by adjusting the volume derogation factor—a multiplier giving extra weight to certain vehicles in fleet CO₂ calculations. The June 2024 draft proposed increasing the EV factor from three to four and reducing strong hybrids from two to 1.2.

The revised draft maintains the factor for EVs at three and strong hybrids at two, benefiting manufacturers like Maruti Suzuki and Toyota, allowing their hybrid models to retain full credit under CAFE and remain attractive for compliance.

Carbon Neutrality Factor (CNF)

The new draft introduces a Carbon Neutrality Factor (CNF), offering emission discounts for vehicles using cleaner fuels or hybrid technology. Key highlights include:

• Petrol cars running on E20-E30 fuel: 8% reduction

• CNG vehicles: 5% reduction (higher with biogas blends)

• Flex-fuel ethanol vehicles and strong hybrids running on flex fuel: 22.3% reduction

For instance, a strong hybrid emitting 100 g/km in lab tests would be counted as 77.7 g/km for CAFE compliance if it runs on flex fuel. Currently, strong hybrids sold in India (Toyota Hyryder, Innova Hycross, Camry; Maruti Suzuki Grand Vitara, Invicto) run on regular petrol and are eligible only for the 8% petrol discount. Manufacturers would need to introduce flex-fuel variants to gain the full CNF, which Toyota has piloted in Brazil and showcased in India.

Industry Response

The BEE has given stakeholders 21 days to submit comments on the revised draft norms. Business Standard reached out to major carmakers—Maruti Suzuki, Hyundai, Tata Motors, Toyota, Mahindra & Mahindra, Kia, Skoda, and JSW MG Motors—but none responded as of Thursday.

The revised draft marks a significant step in India’s fuel-efficiency policy, balancing industry demands for small car relief with incentives for cleaner technologies, strong hybrids, and flex-fuel vehicles.

BEE, CAFE norms, fuel efficiency, small cars, Maruti Suzuki, Toyota