Government Scraps Small Car Emission Benefit: What It Means for Maruti Suzuki

The government has removed a proposed concession for small petrol cars under the upcoming fuel emission norms, a move that is expected to impact Maruti Suzuki the most. The decision comes after objections from several carmakers who said the concession would give an unfair advantage to companies with a strong small car portfolio.

The revised rules are part of the Corporate Average Fuel Efficiency (CAFE-3) norms, which aim to reduce carbon dioxide emissions from passenger vehicles starting April 2027.

What Was the Small Car Concession

Under the earlier draft, the government had proposed a relaxation for small petrol cars that met specific criteria. These included cars that were under four metres in length, had engine capacity up to 1,200 cc, and weighed less than 909 kg.

Such cars would have been allowed a higher emission limit compared to heavier vehicles. This would have made it easier for manufacturers of small cars to meet the overall fleet emission targets.

Why the Government Changed the Rules

Several automakers including Tata Motors, Hyundai, Mahindra and JSW MG Motor raised concerns over the proposal. They argued that the concession would largely benefit one company and distort competition in the market.

These companies also said the move could slow down investments in cleaner technologies such as electric vehicles and hybrids. After reviewing these concerns, the government decided to remove the weight-based concession and move towards a more uniform emission target.

Impact on Maruti Suzuki

Maruti Suzuki, India’s largest carmaker, has a strong presence in the small car segment. Models like Alto, WagonR and Swift form a major part of its sales. The company had supported the concession, saying smaller cars naturally consume less fuel and emit less carbon dioxide.

Maruti had also pointed out that global markets such as Japan and Europe offer certain benefits for smaller vehicles. With the concession now removed, the company may face higher compliance costs under the stricter norms.

What the New Norms Mean for Carmakers

Under the CAFE-3 rules, carmakers will need to bring down fleet-wide emissions significantly. The target is expected to tighten from the current 113 grams of CO₂ per kilometre to around 91.7 grams per kilometre.

This change is likely to push automakers to increase their focus on electric vehicles, hybrids and more fuel-efficient technologies. For companies dependent on petrol-powered small cars, the transition could be more challenging.

Bigger Shift in the Auto Industry

The decision reflects the government’s effort to balance environmental goals with fair competition. As buyer preferences shift towards SUVs and stricter emission rules come into force, the Indian auto industry is entering a phase of rapid change.