CAFE III fuel efficiency norms notified for cars: 3x credit for battery EVs, no special benefit for small cars
The Indian government has notified the third phase of Corporate Average Fuel Economy (CAFE-3) norms for passenger vehicles, effective from April 2027 to March 2032. The policy incentivizes battery electric vehicles by counting them as three vehicles toward fleet averages to encourage a faster transition to green mobility.
Why it matters
These regulations are critical for India's automotive industry as they mandate stricter fuel efficiency standards and accelerate the adoption of electric vehicles.
The Centre has notified the third phase of Corporate Average Fuel Economy (CAFE-3) norms for passenger vehicles for the five years beginning April 1, 2027. Battery electric vehicles will count as three vehicles when a carmaker's fleet average is calculated.The norms apply to M1 category motor vehicles as specified under the Central Motor Vehicle Rules, 1989, and remain in force from April 1, 2027 to March 31, 2032.Also read: CAFE III norms signal faster EV shift in India while balancing automakers concerns: NomuraAccording to the notification, the Ministry of Road Transport and Highways (MoRTH) will enforce the provisions on testing and calculation methods, reporting, conformity of production, carbon neutrality factors and the derogation factors, in consultation with the concerned ministries and departments.Fuel consumption targets for carmakersEach manufacturer's annual average fuel consumption standard will be calculated on the Modified Indian Driving Cycle (MIDC) in petrol-equivalent litres per 100 km.
Get smarter about the news
Sign up free for a feed built around what you actually care about, Dive Deeper research on any story, and the full text of every article.
Create free accountAlready have an account? Sign in