India's Ministry of Power has proposed a credit trading system for automakers under updated Corporate Average Fuel Efficiency (CAFE) norms. Manufacturers that exceed fleet efficiency targets can sell surplus credits or bank them for future use. Those falling short can buy credits from the Bureau of Energy Efficiency at a fixed price of 2,500 rupees per gram of CO2 per kilometer, covering FY23 to FY27. A formal passbook system will track all accruals and debits to improve transparency. This market based approach replaces the earlier penalty structure and gives automakers a predictable compliance cost. Companies with strong EV or efficient ICE lineups stand to generate surplus credits, potentially adding a revenue stream. Firms with higher fleet emissions face a clear cost for non compliance. The 14 day public comment window is open now. Final rules and any price adjustments will determine how this affects the Indian auto market and its emissions trajectory.
