Tata Motors, M&M, and JSW MG oppose Niti Aayog's transport report

Govt think-tank's report on transport sector suggested CAFE norms must incentivise smaller entry-level vehicles

India’s three carmakers — Tata Motors, Mahindra & Mahindra and JSW MG Motor India — have opposed Niti Aayog’s February 10 report for suggesting that upcoming Corporate Average Fuel Efficiency (CAFE-3) norms should favour small cars, stating that such recommendations could skew the market towards internal combustion engine (ICE) vehicles and weaken long-term emission goals.

 

These three companies — through emails or letters to Niti Aayog — have also raised objections to the report’s classification of flex fuel vehicles (FFVs) and compressed biogas (CBG) vehicles as “zero emission vehicles (ZEV)”, Business Standard has learnt.

 

Moreover, Tata Motors and Mahindra & Mahindra have also objected to being described as “collaborators” or “experts” in the report, stating their participation in stakeholder discussions did not amount to full endorsement of its recommendations. JSW MG Motor India said it was not consulted at all before the report was finalised.

 

Not just carmakers, even non-profit research organisation International Council on Clean Transportation (ICCT) has opposed the way ZEVs have been defined.

 

In the report, Niti Aayog put in a disclaimer that the “assertions, interpretations and conclusions” are those of the authors and “do not necessarily reflect the views of Niti Aayog or the Government of India”, adding that it does not “endorse or validate” the specific policy suggestions made in the document.

 

Queries related to this matter sent by Business Standard to Niti Aayog, Tata Motors, M&M and JSW MG Motor remained unanswered.

 

Small cars and CAFE norms

 

Corporate Average Fuel Efficiency (CAFE) norms require carmakers to meet a fleet-wide average carbon dioxide emissions target (in grams per km) each year, failing which they face penalties. As CAFE-3 is being framed, proposals to give softer targets or relief to small (sub-909 kg) petrol hatchbacks have sparked sharp industry-wide controversy.

 

The Niti report suggests that CAFE norms should incentivise lighter, smaller entry-level vehicles. M&M strongly opposed this, saying there is “no logical justification to grant special privileges to small cars in CAFE norms”.

 

It cautioned that concessions based on vehicle weight “could create a perverse incentive for the industry to compromise on safety or crash performance in order to reduce vehicle weight to meet stringent CAFE-3 targets”, potentially undermining gains made under India’s vehicle safety rating programme.

 

Tata Motors similarly said promoting small ICE cars through CAFE “goes against the principle of transitioning to green technologies and potentially offers a loophole to continue ICE technologies”.

 

JSW MG also opposed Niti’s recommendation, stating that any incentive for a specific vehicle configuration (sub-909 kg cars) would create “competitive distortion, particularly in a segment where one OEM commands approximately 90 per cent market share”.

 

ZEV definition at the centre

 

A key point of contention is the report’s classification of FFVs and CBG vehicles as ZEVs. FFVs are internal combustion engine (ICE) vehicles that can run on higher ethanol blends, while CBG vehicles run on biogas. Both burn fuel and therefore produce tailpipe emissions.

 

M&M said categorising such vehicles as ZEVs is “not technically accurate” because FFVs and CBG-run cars derive energy from an internal combustion engine, wherein combustion inevitably results in tailpipe emissions. “We would also like to note that these vehicles are not recognised as ZEVs by any country, and no policy document from the Government of India or state governments classifies them as such,” it added.

 

Tata Motors said that including FFV and CBG vehicles under a unified ZEV framework would not be recognised by any major international standard. It said that even Brazil — which is the world’s largest flex fuel market — does not use the ZEV label for FFVs. It warned that “such a new categorisation is likely to impact investor confidence”.

 

JSW MG also flagged the issue, saying the expanded definition “risks diluting the earlier focused electrification narrative and may introduce ambiguity in long-term market signals at a critical stage of India’s EV transition”.

 

ICCT stated that electric vehicles, FFVs and CBG-run cars have different emission profiles and their aggregation “obscures” true zero-emission adoption and may “inflate perceived electrification levels”.

 

‘Collaborator’ tag contested

 

M&M said listing it as a collaborator in the report “may inadvertently suggest that the company has fully endorsed the report and that all its contents and policy recommendations reflect our official position”. It added that its role “was limited to participation in a single meeting in July 2024… We did not receive any draft version of the report thereafter for review prior to its publication”. M&M has requested that its name be removed from the list.

 

Tata Motors echoed the concern, stating: “While Tata Motors has been mentioned as a contributing expert, we would like to bring to your attention that a draft version of the report was not shared with us prior to final publication.” As a listed company, it said it is required to clarify that it has “reservations on some of the contents of the report”.

 

JSW MG, in its representation, said it “was not included in the stakeholder consultation process”, adding that the absence of consultation with “a key EV-focused OEM may have limited the breadth of industry perspectives incorporated into the modelling and recommendations”. About 80 per cent of all cars sold by JSW MG are electric.

 

Lifecycle emissions debate

 

The report states that battery electric vehicles (BEVs) may need to be driven for 1.5–2 lakh kilometres to offset higher manufacturing emissions — mainly from batteries — and become environmentally advantageous compared to ICE vehicles under current grid conditions.

 

M&M said it “strongly disagree[s] with this statement”, citing studies that show BEVs emit significantly less greenhouse gases over their lifecycle. It pointed to research indicating that BEVs in India emit “up to 38 pc less CO2e per km than ICEVs in the passenger car segment”.

 

The company also stressed that BEVs convert “around 90 per cent of electricity into traction energy, compared to less than 25 per cent for petrol engines”, highlighting their inherent efficiency advantage.

 

Tata Motors questioned how the 1.5–2 lakh km figure was arrived at and said the report relies heavily on select studies, while other cited institutional reports present a more positive view of BEVs.

 

JSW MG said that the modelling assumption projecting 100 per cent ZEV sales only by around 2055 “underscores the indispensability of early and accelerated electrification rather than a broadened reliance on combustion-based pathways”. 

OEMs’ view

M&M: “No logical justification to grant special privileges to small cars in CAFE norms”

TaMo: Promoting small ICE cars “goes against the principle of transitioning to green tech and potentially offers a loophole”

JSW MG: Incentive would create “competitive distortion, particularly in a segment where one OEM commands about 90% market share