New CAFE-III fuel-efficiency rules: What changes for EVs, hybrids and small cars
The Indian government has introduced the CAFE-III fuel-efficiency norms, which will regulate passenger vehicle emissions from 2027 to 2032. The framework includes a credit-trading system to encourage manufacturers to adopt cleaner technologies and improve fuel efficiency.
Why it matters
These regulations are a critical step in India's automotive industry transition toward decarbonization and stricter environmental compliance.
India’s passenger vehicle industry is set for a new fuel-efficiency regime, with the government notifying Corporate Average Fuel Economy (CAFE-III) norms that are set to come into force from April 1, 2027. The framework, which will remain applicable until March 31, 2032, covers new passenger vehicles manufactured or imported for sale in India.The ministry of power has laid down fuel consumption and energy consumption standards for M1 category motor vehicles under the Central Motor Vehicle Rules, 1989.The new framework changes how manufacturers can meet their fuel-efficiency requirements. Along with annual fuel-consumption targets, it provides for credit trading, super credits for cleaner vehicles, carbon-neutrality factors for certain fuels and credits for specific fuel-saving technologies.Here is what changes under the new CAFE norms:1.
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