2 years after key law, Centre drafts framework to penalise polluting automakers

The draft gives BEE powers to “detect, verify, assess and represent non-compliance cases” before State Electricity Regulatory Commissions (SERCs), which are designated as adjudicating authorities, “in order to avoid the difficulties of imposing of penalty”. The SERC in question will depend on the state in which the non-compliant automaker’s registered head office is located.

Of the total penalties payable, 10 per cent will go to the Central Energy Conservation Fund, while 90 per cent will be transferred to state governments, the draft rules said. In cases involving CAFE violations, automakers must pay each state based on its share of the non-compliant model’s total sales.

The power ministry has invited stakeholder comments within 30 days.

The draft rules come over two years after the Parliament passed the Energy Conservation (Amendment) Act, 2022, which introduced revised penalties on non-compliant vehicles, effective from January 1, 2023. The amendment had empowered the Centre to frame rules on how SERCs should adjudicate non-compliance. The compliance enforcement framework, in the form of the draft rules notified on Monday, comes after a delay of over 30 months.

The 2022 amendment set penalties at Rs 25,000 per vehicle for non-compliance of up to 0.2 litres per 100 km, and Rs 50,000 per vehicle for violations exceeding that.

Earlier, this paper had reported that top automakers face cumulative penalties exceeding Rs 7,000 crore for failing to meet CAFE II norms in 2022-23. Under the draft rules, BEE will be able to verify such cases and refer them to SERCs for adjudication.

The CAFE norms were tightened in the beginning of financial year 2022-23. The quantum of penalties has become a point of contention between the Centre and the auto industry. Car makers are learnt to have argued that the new and stricter penalty norms came into effect only from January 1, 2023, and therefore calculating penalties on the basis of cars sold in the entire financial year would not be appropriate.

In 2022-23, models and variants from 18 automakers were tested at accredited labs under simulated driving conditions. In December 2022, the Energy Conservation Act was amended to impose stricter penalties on defaulting automakers.

While the fuel consumption compliance report for 2021-22 has been published — showing all 19 carmakers were in compliance — the report for 2022-23 has been delayed by over a year. Industry sources say the 2023-24 report is also ready but has not been released since the report for the previous year is hanging fire.