Archive · 23 Jul 2026
Indian Carmakers Split Over CAFE 2 Credit System
The Indian government wants to change the rules for carmakers to meet fuel-efficiency targets.
Some carmakers, like Tata Motors and JSW MG Motor, don't like the changes because they think it's unfair to change the rules so late.
Other carmakers, like Maruti Suzuki and Hyundai, support the changes because they think it's a fair way to comply with the rules.
The disagreement might delay the finalization of these rules.
The Indian government proposed a credit-debit system for carmakers to meet CAFE 2 fuel-efficiency targets.
Tata Motors and JSW MG Motor oppose the retrospective application of the system.
Other carmakers like Maruti Suzuki, Hyundai, and Mahindra support the system.
The disagreement could delay the finalization of the CAFE 2 rules.
The credit-debit system allows carmakers to buy credits to offset excess emissions.
- Who
- Indian carmakers including Tata Motors, JSW MG Motor, Maruti Suzuki, Hyundai, and Mahindra.
- What
- Disagreement over the introduction of a credit-debit system for CAFE 2 norms.
- When
- The disagreement surfaced during a meeting of the Society of Indian Automobile Manufacturers (Siam) on Friday.
- Where
- New Delhi, India.
- Why
- Tata Motors and JSW MG Motor oppose the retrospective application of the credit-debit system, while other carmakers support it.
Opposition to Retrospective Changes
Support for Credit System
Retrospective Application
Opposition to Retrospective Changes
Tata Motors and JSW MG Motor oppose the retrospective application of the credit-debit system for CAFE 2, arguing it changes rules unfairly late in the game.
Support for Credit System
Other carmakers like Maruti Suzuki, Hyundai, and Mahindra support the system, seeing it as a fair way to comply with regulations.
Credit Purchase from Regulator
Opposition to Retrospective Changes
Tata Motors argues that buying credits directly from the regulator without corresponding emission improvements is merely an accounting measure.
Support for Credit System
Supporters view the credit system as a necessary mechanism to avoid stiff penalties and ensure compliance.
- CAFE 2
- Corporate Average Fuel Efficiency norms introduced in 2022.
- CAFE 3
- Next iteration of CAFE norms scheduled to start in April 2027.
- Credit-Debit System
- Allows carmakers to buy credits to offset excess emissions.
- Penalty for Non-Compliance
- ₹5,000 per g CO₂/km.
- Credit Purchase Rate
- ₹2,500 per g CO₂/km from the regulator.