Tata Motors said such a step raises a fundamental design concern that is institutional and structural in nature.
Tata Motors Passenger Vehicles has raised formal objections to the Bureau of Energy Efficiency’s (BEE) proposed compliance credit mechanism under the CAFE-2 regulations. The automaker has urged the government to abandon the provision allowing the regulatory body to directly issue and sell carbon credits to non-compliant manufacturers.By stepping into the market as a seller, the company argued, the BEE would compromise its neutral status as an independent administrator and disrupt fair price discovery. Furthermore, the proposed mechanism would permit defaulting carmakers to purchase credits at a heavily discounted administrative rate, effectively bypassing statutory penalties and diluting the incentive to invest in cleaner automotive technologies.The submissions came after the BEE, under the Ministry of Power (MoP), invited 18 original equipment manufacturers (OEMs) to send suggestions or objections related to such amendments to the Corporate Average Fuel Efficiency (CAFE-2) norms. BEE made public the same draft amendments on Wednesday (July 15) proposing giving OEMs option to purchase credits from BEE at the rate of ₹2,500 per g CO2/km for each reporting period from financial year (FY) 2022-23 to FY2026-27.In its response to Pankaj Agrawal, Secretary, Ministry of Power, Tata Motors said, “BEE should regulate, verify and administer the credit-debit mechanism, but should not itself become a seller of credits in that market. Credits should represent actual, measurable and verified over compliance, and should not be created administratively in unlimited quantities merely upon payment.”Credit pricingAlso, the credit pricing mechanism should be such that credits should be priced so that non-compliance is not made cheaper than compliance, it said.Tata Motors said such a step raises a fundamental design concern that is institutional and structural in nature.“A credit market can command confidence only if the regulator remains visibly neutral… If BEE itself supplies credits, it would become, at the same time, the regulator, the market administrator, the price-setter and a counter-party in the very market that it supervises,” it said.Manufacturers that have complied with or exceeded the notified CAFE targets have already made business and engineering choices on the basis of the regulatory framework in force. They have incurred costs, accepted market risk and allocated capital to improve fuel efficiency and reduce emissions… Those credits should not be diluted by administratively created credits that are not backed by equivalent environmental performance, the Nexon maker added.Published on July 15, 2026
