India’s automobile sector is preparing for the rollout of the third phase of the Corporate Average Fuel Efficiency (CAFE) norms, known as CAFE III, expected in 2027. However, the industry is visibly divided, especially over a controversial proposal from Maruti Suzuki. They are seeking more lenient norms for small cars. This has sparked a sharp debate among carmakers, with each player holding a different position. CAFE norms are India’s fuel efficiency standards aimed at reducing carbon emissions by requiring automakers to maintain a company-wide average fuel economy. Each phase has stricter benchmarks. CAFE III will demand tighter emission targets, presenting a challenge for smaller and more affordable cars.
Maruti Suzuki’s Stand – Protect Small Cars
Maruti Suzuki, India’s largest carmaker, has requested more relaxed standards for small vehicles. They cite declining demand and rising costs as major concerns. According to Maruti, strict CAFE III norms could make small cars unaffordable for the middle class, pushing buyers towards used cars or two-wheelers. They argue that small cars contribute relatively less to emissions due to their lower engine sizes and weight, so they should benefit from a more relaxed regulatory approach.
Opposition from Tata, Mahindra, MG & Toyota
Not everyone agrees with Maruti. Rivals like Tata Motors, Mahindra, MG Motor India, and even Toyota have expressed concerns about this proposal. These companies argue that relaxing the norms for one segment, no matter how economically significant, could weaken the environmental goals of the policy. Tata and Mahindra, for example, have invested heavily in electric vehicles and efficient technologies. They view CAFE III as an opportunity to lead in green innovation rather than slow down progress.
Some propose a middle ground, keeping strict norms but offering incentives or phased targets for low cost vehicles. Environmental experts caution that easing CAFE III for any category could send a backward message globally and delay India’s climate commitments.
Conclusion
As the government reviews feedback from stakeholders, one thing is clear there’s no one-size-fits-all solution. While Maruti aims to maintain affordability and mass mobility, others prioritize innovation and environmental leadership. Whether CAFE III becomes a divisive obstacle or a driver for sustainable progress will depend on how well the industry and regulators manage to merge diverse priorities into a cohesive roadmap.
