Hyundai, Mahindra, Kia Among Firms Fined Rs 7,300 cr For Emission Breach

The Centre has flagged eight automobile manufacturers, including Hyundai, Kia, Mahindra, and Honda, for failing to comply with mandated fleet emission standards in the financial year 2022-23. This non-compliance could lead to hefty penalties totaling around Rs 7,300 crore, as reported by The Indian Express.

Among the violators, Hyundai faces the largest fine of over Rs 2,800 crore, followed by Mahindra at nearly Rs 1,800 crore and Kia at Rs 1,300 crore. Other manufacturers, including Honda, Renault, Skoda, Nissan, and Force Motors, are also facing penalties for exceeding emission limits.

Stricter CAFE Norms for FY23: A New Set of Standards

The Bureau of Energy Efficiency (BEE), under the Ministry of Power, enforced stricter Corporate Average Fuel Efficiency (CAFE) norms at the start of the financial year 2022-23. These regulations aimed to reduce carbon emissions and fuel consumption from vehicles, setting new benchmarks:

• Fuel consumption must not exceed 4.78 litres per 100 km.
• Carbon dioxide emissions must be capped at 113 grams per km.

The move towards tighter regulations has stirred debates, with automakers arguing that the new penalty structure—which came into effect only on January 1, 2023—should not apply retroactively to the entire financial year. However, penalties for exceeding emission levels are still being enforced, with Hyundai, Mahindra, and Kia among the hardest-hit companies.

How CAFE Norms Work

Introduced in 2017, CAFE norms aim to improve fuel efficiency and reduce emissions from passenger vehicles. The regulations apply to all vehicles under 3,500 kg powered by petrol, diesel, LPG, CNG, hybrids, and electric batteries. By encouraging manufacturers to produce greener vehicles, including EVs (electric vehicles) and hybrids, the government seeks to make the automotive sector more sustainable.

In the FY22-23 compliance check, the vehicles of 18 automakers were tested under simulated driving conditions. The penalties were based on the number of vehicles that failed to meet the prescribed standards. Notably, the compliance report for FY21-22 showed that all 19 carmakers adhered to CAFE norms.

Rising Penalties for Non-Compliance

To ensure stricter adherence to fuel efficiency and emission standards, the penalties for non-compliance have been significantly increased. While the original penalties under the Energy Conservation Act, 2001 were capped at Rs 10 lakh, the revised regulations, effective December 2022, now impose:

• Rs 25,000 per vehicle for minor deviations.
• Rs 50,000 per vehicle for significant non-compliance.
• A base fine of Rs 10 lakh still applies for every automaker found violating the rules.

Manufacturers are required to submit their data to the International Centre for Automotive Technology (ICAT) by May 31 each year. The data is then reviewed by the Ministry of Road Transport and Highways and the Ministry of Power by August 31.

The Road Ahead: Will Automakers Meet Emission Targets?

As India moves forward with its commitment to reducing carbon emissions, the automotive industry faces a challenging yet necessary shift towards greener vehicles. Stricter CAFE norms and increased penalties are forcing manufacturers to reconsider their strategies for fuel efficiency and emissions control. With electric vehicles and hybrids gaining traction, the push for sustainability in the automotive sector is likely to intensify in the coming years.