NEW DELHI: Car companies in India will have to cough up stiff penalties from April, as Parliament approved a new law mandating heavy fines on a company's annual domestic sales numbers for violation of the mandated Corporate Average Fuel Economy (CAFE) score.
Penalties may run into thousands of crores of rupees for large volumes. The clause in the broader Energy Conservation (Amendment) Act 2022 states that if a company is found to be in breach of the fleet emissions findings, it will have to pay a fine of Rs 25,000 for each car sold.
The bill, approved by Parliament on Monday, empowers the government to mandate industries to use non-fossil fuels, set efficiency standards for vehicles, ships and equipment, as well as create a domestic carbon trading market to hasten the green transition.
While the average corporate CO2 emission limit for Indian car manufacturers has been set at 113 g/km, each company will have its own individual limits based on the number of cars sold and the mix of fuels: petrol, diesel, hybrid, CNG or electric. A fine of Rs 25,000 will be applied if the CO2 emissions of the company's fleet are higher by 0-4.7%.
If fleet CO2 emission is higher than 4.7 grams, the fine will be Rs 50,000 per unit sold. Industry observers said the fines in India are "significantly higher" than in other geographies and would be a setback for companies working to add sustainability to the fleet.
For companies that sell by volume, the fine can run into billions of rupees, even if their carbon dioxide emissions are just a little over the limit. This is unfair because companies are investing in green technologies such as hybrid, electric and compressed natural gas, in addition to what they spent on migrating to BS6 standards,” an official said.