Fuel efficiency: At Rs 2,728 crore, fine on car companies cut to 1/3rd

NEW DELHI: The penalty on nine carmakers that failed to meet the Corporate Average Fuel Efficiency (CAFE-2) targets for three years — FY23 to FY25 — has been revised to Rs 2,728 crore, as per power ministry’s presentation made to the PMO last week. Earlier, the penalty was estimated around Rs 7,800 crore.

Earlier, penalty was fixed at Rs 10 lakh per OEM plus Rs 25,000 per car manufactured for non-compliance of norms below 0.2 litres per 100km and Rs 50,000 per unit for violation beyond 0.2 litres per 100km. Under the new calculation, for April-Dec of FY23, penalty has been fixed at Rs 37.5 lakh as standard for all OEMs. This has resulted in reduction of penalty.





TOI has learnt that the ministry also said in its presentation that the credit-debit registry of each original equipment manufacturer (OEM) will be established and maintained by the designated authority. Officials said this will ensure better enforcement of penalties and provisions along with providing greater clarity as govt is working to finalise the norms for CAFE-3.

The ministry, in its presentation, said that surplus credits generated by a manufacturer may be pooled within the same block period — first three years and then two years during the 5-year implementation period — for compliance. OEMs with deficit credits can procure credits from other manufacturers holding surplus credits. Manufacturers that still remain with deficit credits will face penalties.

Earlier, PMO had asked power and road ministries to come up with a clear mechanism for recovery of penalties imposed on carmakers. CAFE-2 is in force from FY23 to FY27 and the next phase is scheduled to be from FY28 to FY32.
Ready to Make a Smarter Property Decision? Build Your Legacy with TOI Homes. - Check Bihar 10th Result 2026 Here - Live Updates on BSEB Bihar Board 10th Result 2026