Mahindra, Hyundai among 8 carmakers likely to face emission penalty: Report

Major carmakers in India, including the likes of Hyundai Motor, Mahindra, Kia and Honda Cars, may face high penalty for not complying with fleet emission levels in 2022-23 FY. According to a report by Indian Express, the carmakers could end up paying fine worth ₹7,300 crore for failing to achieve the Corporate Average Fuel Efficiency (CAFE) standards which were tightened in 2022. A final decision to implement the emission penalty on these eight carmakers is yet to be taken as discussions are underway between all stakeholders.

The report surfaces at a time when northern part of India, especially in Delhi and its surrounding neighbourhood, is under the grip of severe pollution with AQI levels hovering at severe to severe plus category. The authorities have slapped restrictions on vehicle movement to curb pollution, including banning BS-III petrol and BS-IV diesel cars from the roads until further notice. The report also assumes significance as Union Minister Nitin Gadkari pointed out that India cannot reduce pollution until dependency on fossil fuel like petrol and diesel are not cut.

CAFE norms emission penalty: Who pays how much?

According to the report, the three major carmakers Hyundai, Mahindra and Kia could end up paying bulk of the emission penalty of nearly ₹7,300 crore. Hyundai may have to pay the highest fine of nearly ₹2,837 crore, about 60 per cent of the annual profit it posted in FY2023. Mahindra too may have to pay up ₹1,788 crore while another Korean auto giant Kia may face around ₹1,346 crore penalty. The emission penalties are divided in two slabs with ₹10 lakh as fixed penalty for each and ₹50,000 or ₹25,000 penalty for each vehicles manufactured during the financial year.

CAFE norms emission penalty: Carmakers' objection

None of the carmakers have issued any official statement regarding the emission penalties they may face. Carmakers have urged the Centre to reconsider applying the new CAFE norms on vehicles manufactured in the entire financial year will be unfair. The new CAFE norms set by the Bureau of Energy Efficiency, which falls under the Union Ministry of Power, were introduced in 2022 but was implemented from January last year. The Centre has not released the CAFE norms report for the FY2022-23 yet and discussions are on between the stakeholders to get more clarity amid objections raised by the carmakers.

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What is CAFE norms?

The report says that the eight carmakers, which also include the likes of Skoda, Renault, Nissan Motor and Force Motors, have failed to comply with the CAFE norms in the previous financial year. The CAFE norms, which were first introduced in India back in 2017, are a set of rules that limit the amount of carbon dioxide that can be emitted by a car manufacturer's fleet in a single financial year. The rules were revised in 2022 with stricter norms kicking in. It says that all fleet should have fuel consumption of not more than 4.78 litres per 100 kms and carbon dioxide emissions of not more than 113 grams per km.

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