Mahindra and Mahindra has denied that any penalty has been levied or is being considered on the company over emission levels, and said that it does not see any material liability on the company.
According to a report by the Indian Express, eight carmakers including Hyundai, Kia, Mahindra and Honda have higher than mandated fleet emission levels in financial year 2022-23, which could mean penalties of around Rs 7,300 crore.
In its disclosure to the exchanges, the automaker said that any reference in the news article about penalty imposed on the company is factually incorrect.
“Corporate Average Fuel Efficiency Norms II (“CAFE Norms”) assessment period for FY2023 was from 1st April, 2022 to 31st March, 2023. In December 2022, Energy Conservation Act 2001 (“EC Act”) was amended to include penalty for vehicle manufacturers in case of non-compliance of CAFE Norms. It was clearly stated that this amendment is effective from 1st January 2023 only. Applying the amended penalty under EC Act for the full period of FY2023 would mean the penalty is being applied retrospectively, which is incorrect. Hence, the company doesn’t expect any material liability for FY2023,” Mahindra explained in its disclosure.
The Bureau of Energy Efficiency (BEE), under the Union Ministry of Power, requires all units sold by car companies during the 2022-23 to achieve India’s Corporate Average Fuel Efficiency (CAFE) norms.
What are CAFE norms?
The Corporate Average Fuel Efficiency (CAFE) norms are a set of regulations that limit the amount of carbon dioxide (CO2) that vehicles can emit in a fiscal year. The norms were introduced in 2017 under the Energy Conservation Act, 2001 to reduce oil dependency and air pollution.
CAFE norms apply to petrol, diesel, liquefied petroleum gas (LPG), CNG, hybrid, and electric passenger vehicles with a gross vehicle weight (GVW) of less than 3,500 kg.
These norms relate the average fuel consumption of all vehicles sold by a manufacturer in a fiscal year to their average kerb weight. CAFE norms were introduced in two phases, with the first phase effective from 2017–18 and the second phase effective from 2022–23.
The CO2 emission targets for the two phases are 130 grams per kilometer (g/km) by 2022–23 and 113 g/km from 2022–23 onwards.
Non-compliance with the CAFE norms can result in significant penalties, encouraging manufacturers to produce more fuel-efficient vehicles.