The Indian government is set to impose stringent CAFE (Corporate Average Fuel Economy) requirements on Indian automakers within the next year. While the current average allowed for an automaker’s full line of vehicles is 36.6 mpg, companies like Mahindra & Mahindra and Tata will have until 2015 to make a 10 mpg improvement when the new standards take effect. If the CAFE requirement isn’t met, manufacturers will face monetary penalties.
The increased fuel economy ratings are directly related to a reduction in CO2 emissions. The current 36.6 mpg target correlates with the production of 165 grams per kilometer, and the 46.8 mpg target translates to 135 g/km of CO2 emissions. Environmental organizations are pushing for India to aim for parity with European standards and achieve 110 g/km by 2020.
Indian manufacturers build many small vehicles like Mahindra’s Gio and Maxximo which help them to meet the current standards. However, the proposed requirements will force all manufacturers to tighten their fuel efficiency belts. Since Mahindra is, and intends to remain an SUV-focused company, we can expect to see economy improvements across the product range, but they will certainly make hybrid and electric technology more of apriority. Efficient designs from Ssangyong and Mahindra-Reva electric cars should help Mahindra meet the standards as well.
Of course none of this will immediately effect the US introduction of Mahindra or Ssangyong vehicles. But it does help to force common global economy and emissions standards into place. India is emerging as an international automotive player. Quickly stepping up to meet some of the world’s strictest emissions standards is a very positive move which will help all Indian manufacturers to be seen as serious global carmakers and shed some of their third world stigma.