As cities across India grapple with escalating pollution levels and environmental concerns, the country’s top car manufacturers are finding themselves in hot water for exceeding mandated fleet emission levels. The Bureau of Energy Efficiency (BEE) is recommending significant penalties for manufacturers, and these automakers are now under pressure to make swift changes in their product lineups to adhere to the stricter norms and deliver greener, less-polluting vehicles.
Stricter Regulations and Fines
The stiff penalties stem from the recent upgrade in the Corporate Average Fuel Economy (CAFE) norms that went into effect in January of this year. These new regulations set stringent limits on the total carbon dioxide emissions produced by a manufacturer’s fleet. The calculations are based on various factors, including the weight of individual vehicle models and the number of units sold.
The penalty regime has been introduced at a critical juncture when many major Indian cities, including Delhi-NCR, Mumbai, and regions in Rajasthan, Punjab, Haryana, and Uttar Pradesh, are grappling with hazardous pollution levels. Air quality index (AQI) numbers have reached record levels, prompting the Supreme Court to take serious action against polluters.
According to the Energy Conservation (Amendment) Bill 2022, which was passed by the Parliament in December 2022, companies found to have emissions levels higher than their mandated fleet norms would face substantial financial penalties.
Mild Penalties Initially: During the first nine months of the fiscal year 2022-23, the penalty levels were relatively mild, with fines of Rs 10,000 per day and an additional Rs 10 lakh for non-compliance.
Heavier Fines: However, the rules underwent a transformation from January 2023, and they now prescribe much heavier fines. For companies with carbon emissions exceeding the norms by 0-4.7 grams per kilometer, the penalty is Rs 25,000 per unit sold. If emissions are higher by more than 4.7 grams, the penalty becomes even stiffer at Rs 50,000 per vehicle sold.
Automakers Facing the Heat
The initial findings from the Bureau of Energy Efficiency have cast a harsh spotlight on several prominent automakers. Kia, the Korean automotive giant, is facing the maximum penalty, a staggering Rs 373 crore, with emissions exceeding the prescribed corporate average fuel efficiency (CAFE) limit by 4.4 units per gram/kilometer during the January-March 2023 period. Kia’s sister company, Hyundai, is close behind, incurring penalties of Rs 370 crore due to emissions that exceeded the mandated norms by 7.7 units.
Other automakers are also at risk of significant fines. Honda Cars, with emissions exceeding norms by as much as 17 units, may face a penalty of Rs 103 crore. Renault, with emissions surpassing the norms by 15 units, could be penalized Rs 75 crore. Nissan faces a fine of Rs 41 crore for exceeding the norms by 15 units. Skoda Auto Volkswagen, which sells brands such as Skoda, VW, and Audi in India, might have to pay Rs 59 crore for emissions exceeding the norms by 1.1 units. Force Motors, although facing a much lower penalty of Rs 0.7 crore, still exceeds emissions by 46 units.
Eco-Friendly Automakers
While some automakers face the daunting prospect of hefty fines, others have managed to keep their emissions well within the prescribed limits. Maruti Suzuki, Tata Motors, MG Motor, Toyota Kirloskar, Mercedes-Benz, Jaguar Land Rover, Volvo Auto, and FCA India Automotive are among the companies that have not only met the prescribed limits but have achieved even lower emissions.
These manufacturers have adopted an array of eco-friendly technologies, including the use of compressed natural gas (CNG), hybrid vehicles, and electric models, allowing them to meet stringent emission standards.
