India mulls easing fuel efficiency norms for small cars sought by Suzuki, sources say

NEW DELHI, June 26 (Reuters) - India is considering relaxing fuel efficiency norms for small cars after lobbying by Maruti Suzuki, which has seen sales of such cars drop amid an SUV boom, industry and government sources told Reuters.Small cars have been key to Maruti's success in India and account for most of its sales there.

However, declining demand for small models, such as Alto or Wagon-R, has driven their share in the carmaker's sales to less than 50% of the 1.7 million cars it sold last fiscal year from nearly two-thirds two years ago. India is also concerned about falling sales of small, affordable cars, according to a senior government official, and the country's top carmaker recently made the case for more favourable fuel emission norms arguing slumping sales will hurt overall growth of the passenger vehicle market.

"There should be more benefit for small cars. Maruti has been asking for that and we agree," the official said, explaining the rationale behind the planned move.

Under its Corporate Average Fuel Efficiency norms, India currently links the quantity of permissible carbon dioxide emissions to the vehicle's weight for all cars weighing less than 3,500 kg (7,716 lb). In a closed-door meeting on June 17, the ministry asked carmakers, including Tata Motors, Mahindra & Mahindra and Volkswagen, if they agreed to give small cars more leeway in the next set of fuel efficiency norms that will apply from April 2027, three people said.

The companies are yet to respond, but any preferential treatment will be a departure from a previously agreed consensus and could be seen as giving Maruti an unfair advantage, four sources said.

Tata, Mahindra, Volkswagen, Hyundai, JSW MG Motor and Toyota also did not respond to emails seeking comment.

Renault's country head, Venkatram Mamillapalle, said the company is confident that India's auto trade body will "represent the collective voice of the industry ... that benefits all stakeholders".

Four people familiar with the matter said that applying different norms based on a car's weight or size has not come up during months of consultations between the government and automakers.