Stock Markets February 6, 2026

India Drops Small-Car Exception From New Fuel Efficiency Rules

Power Ministry revises draft standards to remove light-car carve-out and tighten emissions reduction pathway

By Leila Farooq
India Drops Small-Car Exception From New Fuel Efficiency Rules

India's Power Ministry has removed a proposed exemption for small petrol cars from forthcoming fuel-efficiency regulations, according to a government draft. The earlier September proposal would have treated petrol cars weighing 909 kg (2,004 lb) or less differently - a move seen as advantageous to the dominant small-car maker controlling roughly 95% of that segment. The latest 41-page draft eliminates that special treatment, restricts weight-based over-compensation and sets a steeper emissions reduction trajectory, increasing pressure on automakers to raise electric and hybrid vehicle sales.

Key Points

  • The Power Ministry removed a proposed exemption for petrol cars weighing 909 kg (2,004 lb) or less from the revised fuel-efficiency draft.
  • The 41-page document tightens rules to limit over-compensation for vehicle weight and aims to level competition between light and heavy fleet manufacturers.
  • The draft introduces "a substantially steeper reduction pathway" for emissions, increasing pressure on automakers to grow electric and hybrid vehicle sales.

India's regulators have revised a draft of upcoming fuel-efficiency rules to eliminate a previously proposed concession for lighter petrol vehicles, according to the latest government document. The change follows objections from automakers, including Tata Motors and Mahindra & Mahindra, and tightens requirements across the board.

The circulating text shows the September draft included a carve-out for petrol cars with a curb weight of 909 kg (2,004 lb) or less. Market observers had widely interpreted that provision as providing an advantage to the maker that currently controls about 95% of the small-car market in India.

In the most recent 41-page draft, the Power Ministry has removed the small-car exemption and amended multiple parameters to reduce opportunities for manufacturers to be over-compensated on account of vehicle weight. The stated objective of the revisions is to foster a more level competitive environment between producers of lighter and heavier vehicle fleets and to drive measurable improvements in real-world efficiency.

The document describes the updated standards as introducing "a substantially steeper reduction pathway" for emissions. That language signals tighter timelines or targets for lowering fleet emissions, according to the draft text.

Removed from the rules, the small-car carve-out had been perceived by critics as creating an uneven playing field. With that provision now gone, the revised rules are constructed to apply more uniformly, increasing regulatory pressure on all manufacturers to expand sales of electric and hybrid models.

Automakers named in the document had previously voiced objections to the special treatment for the lightest petrol cars. The revised draft addresses those concerns by limiting weight-based adjustments and strengthening other technical parameters, reflecting a policy shift toward stricter, broadly applicable efficiency requirements.


Context and next steps

The government document is a draft and presents the revised framework in its current form. It outlines changes intended to reduce emissions and to prevent disproportionate advantages tied to vehicle weight. The draft does not detail enforcement mechanisms or implementation timelines in the passages quoted here.

Risks

  • Manufacturers may face higher compliance burdens as the exemption is removed and weight-based adjustments are limited - impacting the automotive sector.
  • The tighter emissions reduction pathway could force accelerated product or sales shifts toward electric and hybrid vehicles, creating transitional pressures in manufacturing and supply chains.
  • The draft does not specify enforcement details or timelines in the quoted sections, leaving uncertainty about how quickly changes will be implemented and monitored.

More from Stock Markets

TRG Latin America Acquisitions Prices $200 Million IPO, Units to Begin Nasdaq Trading Feb. 26, 2026 Feb 25, 2026 TRG Latin America Prices $200 Million IPO, Units Start Trading on Nasdaq Feb 25, 2026 BlueScope Says Revised SGH-Steel Dynamics Offer Falls Short of Value Expectations Feb 25, 2026 Senate Panel Advances Proposal to Push ISS Retirement to 2032, Mandate Lunar Base for Artemis Program Feb 25, 2026 APEX Tech Acquisition Prices $100 Million IPO, Units to Begin Trading on NYSE Feb 25, 2026