Automakers give the green light to CAFE III proposals, norms to come into effect from April 2027

New Delhi: India's automakers have "agreed" to the proposals in the upcoming fuel efficiency rules for vehicles and sought their early finalisation, people familiar with the development said.

The proposed Corporate Average Fuel Efficiency (CAFE 2027 or CAFE III) norms, which set limits on CO₂ emissions for passenger car fleets, will take effect from April 1, 2027. ET has learnt that The Society of Indian Automobile Manufacturers (SIAM) backed the draft guidelines for CAFE III, with its president, Shailesh Chandra, calling the new guidelines "balanced" and aligned with the goal of improving fuel consumption and tapering emissions from vehicles.

Also read: CAFE-III to kick in from April 2027; Govt unlikely to extend implementation date: Official

A person who attended the meeting said there is broad consensus in the industry over the latest draft. "While some carmakers, given their strategic interest, did request the government for creation of a new category for small cars, others held that since the slope has been altered (in the new draft)-relaxing emission targets for small cars and making norms more stringent for heavier ones-there is no requirement for any more alterations," an industry executive aware of the development said.


A senior official who attended the discussions told ET that the final CAFE III notification will be issued shortly.

ET had reported earlier that the revised norms will require automakers to improve CO2 emissions across their fleet of vehicles annually through 2031-32.

Also read: EVs likely to lose zero-emission tag under CAFE III

The draft leaves a significant gap in super credits between electric and strong hybrid vehicles, signalling continued policy preference for them.

There were no discussions on timelines or any request to delay implementation of CAFE III, said another industry executive.

SIAM is now "in alignment within on the highly complex and technical CAFE norms", despite significant diversity in member portfolios across powertrains, vehicle sizes, and customer segments, the industry representative said.

This was possible despite difficult consensus-building among over 20 passenger car makers through structured dialogue, trade-offs and concessions, industry representatives said.