Stricter CAFE III norms notified for automakers: Cos need to cut average fuel usage of PV fleets over a 5-year period

New Delhi: The government has notified Corporate Average Fuel Economy (CAFE) III guidelines, making it mandatory for automakers to reduce average fuel consumption of their passenger vehicle fleets progressively over a five-year period starting April 2027.

The power ministry said the new norms for passenger vehicles will drive improvements in fuel economy through year-on-year tightening of targets.

Fuel consumption benchmark will be tightened from 3.996 litres/100 km in FY28 to 3.3273 litres/100 km in FY32, an improvement of around 16.7% in the period.


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The revised target line has been flattened to provide a more balanced, weight-sensitive approach, with relatively softer targets for lighter vehicles and greater fuel efficiency requirements for heavier vehicles, the ministry said in a statement.

The reference weight has been raised to 1,229 kg under the new norms from 1,082 kg, up 13.6%, reflecting evolving characteristics of passenger vehicle fleets. The list of recognised fuel-conservation technologies has been expanded to 12 from four, giving manufacturers’ flexibility to adopt cleaner technologies, alternative fuels, and other new solutions.

The auto industry has termed it a structured road map with clear annual targets. “Following extensive dialogue...the framework strikes a pragmatic balance between what is necessary for the environment and what is achievable for the industry, while strengthening India’s energy security,” said Velusamy R, president, automotive business at M&M. Industry body Society of Indian Automobile Manufacturers (SIAM) said the new regulations will allow companies to plan investments and accelerate innovation.

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“The CAFÉ III regulation framework provides clear predictability which will enable the auto industry to plan investments and accelerate innovation, thereby playing an important role in the country’s journey towards Viksit Bharat in 2047,” said Shenu Agarwal, president, SIAM.

FOCUS ON EASE OF COMPLIANCE

Battery electric vehicles, rangeextended electric vehicles, and plug-in hybrid electric vehicles, among others will receive volume derogation factors, also known as ‘super credits’, in fleet-average calculations.

For ease of compliance and operational flexibility, automakers may choose to meet their obligations over the specified two-year or three-year compliance blocks. The passenger vehicle segment accounts for a substantial share of India’s transport energy demand and is a key contributor to fossilfuel consumption. Like the proposed amendments under CAFÉ II, the new norms introduce a credit and debit mechanism.