India may relax small car fuel efficiency norms to support declining segment sales
The Indian government is reportedly considering a proposal to relax fuel efficiency norms for small cars, following requests from automakers, particularly Maruti Suzuki, as the segment faces declining sales. The move, still under deliberation, could bring regulatory relief to vehicles weighing under 1000 kg.
Small cars have traditionally been a stronghold for Maruti Suzuki, accounting for the bulk of its domestic sales. However, shifting consumer preferences towards larger SUVs have contributed to an 18% drop in Maruti’s small car sales over the past two years. The share of small cars in the company’s total sales has fallen below 50% from nearly two-thirds previously.
According to government officials, there is growing concern about the shrinking market for small, affordable vehicles, which has traditionally played a key role in expanding mobility in India. In this context, easing fuel efficiency rules for lightweight vehicles could help manufacturers sustain this segment without additional pressure to electrify their lineups immediately.
Currently, India’s Corporate Average Fuel Efficiency (CAFE) norms link permissible carbon dioxide emissions to the weight of the vehicle for all models under 3500 kg. The potential revision would specifically ease these requirements for cars weighing less than 1000 kg, making it easier for automakers with small car-heavy portfolios to comply.
Such a change would particularly benefit Maruti Suzuki, which has 10 of its 17 models under the 1000 kg threshold. Other carmakers like Hyundai, Renault, Toyota and JSW MG Motor also have small cars in their portfolios, though they have not publicly commented on the potential revision.
A recent closed-door meeting between the Ministry of Heavy Industries and several automakers, including Tata Motors, Mahindra and Volkswagen, discussed whether small cars should be granted more flexibility under the fuel efficiency norms set to take effect from April 2027. Automakers are yet to provide formal feedback.
While some industry voices argue that adjusting norms based on vehicle size could help preserve affordability and market diversity, others warn that preferential treatment could disrupt the level playing field previously agreed upon by manufacturers.
Maruti Suzuki has not issued an official statement regarding the proposal but its parent company, Suzuki Motor Corporation, highlighted in its 2024 sustainability report that small cars contribute to environmental benefits not only due to lower emissions but also because they require fewer raw materials and less energy to manufacture.
The Ministry of Heavy Industries has not provided an official comment on the matter and broader industry consensus remains pending.
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