Government Notifies New CAFE-3 Norms for Passenger Vehicles
The final framework removes a proposed small-car concession and gives battery-electric vehicles the biggest compliance benefit.
- On September 29, India notified the final Corporate Average Fuel Economy framework, establishing efficiency targets for passenger vehicles from April 1, 2027, through March 31, 2032.
- Drafting the framework sparked contention over small-car concessions, as India's market relies on compact petrol vehicles and carmaker Maruti Suzuki had pushed for regulatory relief on cars below 909-kg.
- Under the new CAFE formula, manufacturers must meet targets based on fleet-wide average weight rather than individual models, with reference weight fixed at 1,229 kg.
- Battery-Electric vehicles and range-extended electric vehicles receive a volume derogation factor of 3, while alternative fuels like ethanol offer carbon-neutrality factors of up to 22.3 per cent.
- Carmakers can trade credits or pay the Bureau of Energy Efficiency to cover deficits, with buyout prices starting at Rs 2,500 per g CO2/km for FY2027-28.
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The CAFE 3 norms have been notified. Under this, major changes have been made to several regulations, including car manufacturing, mileage, and carbon emissions. According to the notification, these new rules will come into effect from April 2027. So let's find out what changes this new rule will bring for the average customer.
Govt Notifies New CAFE Norms, Target 16.7% Improvement in Passenger Vehicle Fuel Efficiency by 2032
Get latest articles and stories on Business at LatestLY. The government has notified new Corporate Average Fuel Economy (CAFE) norms for passenger vehicles, targeting a 16.7 per cent improvement in fuel efficiency over five years as India seeks to promote cleaner technologies, alternative fuels, electric vehicles and hybrids in the automobile sector. Business News | Govt Notifies New CAFE Norms, Target 16.7% Improvement in Passenger Vehicle Fuel…
What India’s new CAFE-III fuel-efficiency norms mean for carmakers, small cars and EVs
From April 2027, carmakers will be judged on the efficiency of their overall vehicle portfolios rather than individual models. The final rules also reshape how weight and powertrains affect compliance.
CAFE III norms tighten targets, reward small cars and electrified vehicles
India’s final CAFE III norms tighten passenger-vehicle efficiency targets by nearly 17% through FY32; Maruti Suzuki, Renault and Nissan could benefit, while EV, hybrid, CNG and ethanol credits widen compliance options for Tata Motors, Toyota and Mahindra
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