Hyundai, Tata want India to drop fuel emission concessions seen benefiting Suzuki

By Aditi Shah

NEW DELHI, Nov 28 (Reuters) - India's biggest carmakers including Tata Motors and Hyundai want the government to scrap a weight-based emission concession for small cars under planned new efficiency rules, a move they say would benefit just one company, letters seen by Reuters show.

Tata TAMO.NS, Mahindra & Mahindra MAHM.NS, JSW MG Motor and Hyundai HYUN.NS are concerned that a weight-based relief risks hurting India's EV goals while helping a single player, according to individual letters they wrote to the government.

They did not name the player but industry data shows and three auto executives told Reuters that Maruti Suzuki MRTI.NS would be the main beneficiary.

Maruti, the biggest seller of small cars in India, told Reuters that global car markets like Europe, the U.S., China, Korea and Japan all had some provisions in their emission regulations to protect the "very small cars".

'LIMITED POTENTIAL FOR EFFICIENCY IMPROVEMENTS'

Under India's current Corporate Average Fuel Efficiency norms, the quantity of permissible carbon dioxide emissions applies to all passenger cars weighing less than 3,500 kg (7,716 lb).

The new rules propose tightening average CO2 emissions to 91.7 grams/km from an earlier target of 113 grams/km. This will make it tougher for small cars to meet the target compared with large SUVs, pushing companies to sell more EVs.

In its latest draft, India has proposed leniency for petrol cars weighing 909 kg or less, measuring under four meters in length and with engine capacity of 1200 cc or below as they offer "limited potential for efficiency improvements".

This has created a sharp split between India's leading EV-focused companies and Maruti - for whom 16% of sales come from cars weighing under 909 kg - causing delays in finalising the regulation that is crucial for automakers to plan future product portfolios and investments in powertrain technology.

Three company executives told Reuters the 909 kg threshold was arbitrary and did not align with any global standards, alleging that the move only benefitted Maruti Suzuki.

In a letter to India's power ministry, which is drafting the rules, Mahindra requested omission of a "special category" or definitions based on size or weight.

"(This) can have adverse effects in terms of the nation's progress towards safer, cleaner cars, and can alter the level playing field for industry players," it said.

RISKS TO INDUSTRY STABILITY AND CUSTOMERS

Hyundai told the industries ministry in its letter that the exemption may be perceived internationally as a step backward, at a time when global markets are converging toward stricter fuel-efficiency and zero-emission standards.

"Abrupt policy changes favouring a specific segment risk undermining industry stability and customer interests, as future investments and technology rollouts are planned on the basis of established norms," Hyundai said in a statement to Reuters.

JSW MG Motor said that over 95% of cars under 909 kg come from a single carmaker, without naming anyone.

"A relaxation restricted to this weight band would disproportionately benefit one manufacturer," it said in its letter to the road transport ministry dated November 21.

Tata, Mahindra and JSW MG Motor did not respond to a request for comment. India's power, transport and industries ministries also did not respond to requests.

Maruti told Reuters that small cars consume much less fuel and emit less carbon dioxide than bigger cars, so having this "safeguard" will help both CO2 reduction and fuel saving.

About 16% of its sales in India are of cars weighing less than 909 kg but demand has been falling as buyers choose bigger SUVs.