Real cuts need more than just car rules

India's proposed CAFE-3 norms, released on September 25, have split the ₹22 lakh cr automobile industry down the middle. Effective from April 2027 to March 2032, the draft rules tighten fuel-efficiency and emissions targets sharply: average fuel consumption must drop from 3.7 litres per 100 km in FY28 to 3.01 litres per 100 km by FY32, while CO₂ emissions must fall to 91.7 g/km. The norms also offer a weight-based exemption for small cars: vehicles with an unladen mass up to 909 kg, engine displacement up to 1,200 cc, and length under 4 m get an additional 3 g/km CO₂ credit, easing compliance slightly.

The debate around CAFE-3 revolves around three points: fuel efficiency, safety, and incentives for tech upgrades. Small-car makers, including Maruti Suzuki, argue that stricter targets hit light vehicles hardest. Upgrading engines or adding hybrid tech would be costly. Larger-vehicle manufacturers counter that exemptions distort competition, reduce incentives to invest in cleaner tech, and could create safety risks if light cars rely excessively on weight-based credits without structural reinforcement. Additionally, CAFE-3 is a fleet-wide regulation, meaning that a manufacturer must meet average emissions and fuel-efficiency targets across all its vehicles. Companies with a strong small-car line-up can offset emissions from heavier models more easily. Competitors lacking enough small or efficient vehicles may struggle.

Focusing solely on vehicle-level compliance, however, misses the broader picture. Real reductions in emissions and improvements in road safety require better public transport and fuel quality, smarter urban planning, stricter traffic management and disciplined driving. Only when carmaker regulations are integrated with these broader solutions can meaningful reductions in emissions and safer mobility for all be achieved.