CAFE-3 Norms Tighten Fuel Efficiency Rules

The Central Government has officially notified the third phase of Corporate Average Fuel Economy (CAFE-3) norms for passenger vehicle manufacturers. The new rules will come into effect from April 1, 2027, and remain in force until March 31, 2032. The framework aims to improve fleet-wide fuel efficiency by around 16.7% over the five-year period.

Under the new norms, the fuel-consumption benchmark will gradually tighten from 3.996 litres per 100 km in 2027-28 to 3.3273 litres per 100 km in 2031-32. The corresponding carbon-emission target will decline from about 94.8 grams per km to 78.9 grams per km. The rules apply to new passenger vehicles manufactured or imported for sale in India, with manufacturers required to improve the average efficiency of their vehicle fleets.

The framework provides additional compliance benefits for cleaner technologies. Battery electric vehicles will receive a three-times volume credit, while hybrid and alternative-fuel vehicles will also receive specified benefits. The rules further recognise fuel-saving technologies and carbon-neutrality factors for certain alternative fuels. The government said the framework is intended to provide flexibility for manufacturers while encouraging cleaner and more energy-efficient vehicles.