In defense of small cars: Why Maruti Suzuki is pushing for less stringent fuel efficiency norms

Globally, all major automotive markets, including the US, China, Japan, Korea, and Europe, offer regulatory protection to small cars under CAFE frameworks. In contrast, India's linear weight-based CAFE approach penalises lighter vehicles, Nomura says

  • Published:
  • 06/08/2025 11:19 AM

Corporate Average Fuel Efficiency (CAFE) norms are aimed at improving fuel economy and reducing carbon emissions Image: Shutterstock

Tension had been simmering for a few months, and now it seems to have come to a boil.

India’s largest carmaker, Maruti Suzuki, and many of its closest rivals have been at odds over enforcing a new emission norm in the country, with the former seeking a differential one for its small cars. It claims it is crucial for reviving sales of small cars in the country.

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For many years, sales of small cars have been on the decline, and Maruti Suzuki has blamed the growing cost of vehicles—caused due to new emission and safety norms—as a reason for them becoming unaffordable to first-time buyers. According to the Society of Indian Automobile Manufacturers (SIAM), domestic sales in the mini segment (cars up to 3.6 metres in length) declined from 460,772 in FY19 to 152,262 in FY24 and 133,397 in FY25, a drop of over 70 percent in the last six years. That’s why Maruti Suzuki is seeking a pushback on the emission norms for its small vehicles.

In June, Tata Motors, Mahindra & Mahindra, JSW MG Motor India and Toyota Kirloskar Motor wrote to SIAM opposing Maruti Suzuki’s call to ease fuel efficiency norms for small cars (weighing less than 1,000 kg). These norms, often called the CAFE norms or Corporate Average Fuel Efficiency norms, are aimed at improving fuel economy and reducing carbon emissions from vehicles.

Small cars in the country currently don’t have a separate standard under the existing CAFE 2 norms that have been in force since 2023. As per the existing rules, the average emissions of all passenger vehicles that weigh less than 3,500 kg should not be more than 113 grams of carbon dioxide per kilometre. But since it’s weighted average, it means that some models from the same manufacturer could have higher emissions, with others compensating for it.

Additionally, under the current norms, carmakers also get benefits for selling technologies such as hybrid vehicles and electric vehicles.

Also read: The slow death of small cars

“In India, CAFE targets follow a linear weight-based approach, whereby a lower weight implies a more stringent target,” Japanese think tank Nomura Research Institute said in a report. “Under this linear system, the CAFE framework gives heavier vehicles like SUVs or premium cars a much higher CO₂ target, whereas smaller cars get a much more stringent target.”

Meanwhile, the new norms will also factor in flex fuel and battery when enforcing the new norms that will lower the cap to 91.7 g/km. Flex fuels use a blend of petrol with ethanol or methanol.

“Globally, all major automotive markets, including the US, China, Japan, Korea and Europe, offer regulatory protection to small cars under their CAFE frameworks due to their environmental and socioeconomic value,” the Nomura report adds. “In contrast, India’s linear weight-based CAFE approach penalises lighter vehicles with disproportionately stringent CO₂ targets. This creates a structural bias where heavier vehicles with higher emissions comply easily, while small cars with lower emissions fail. Lightweighting, a key decarbonisation strategy, is thus disincentivised.”

Last Updated :

August 06, 25 11:26:19 AM IST