What’s new in the draft CAFE-III norms? | Explained
The Indian government has released the third draft of CAFE-III norms, which aim to improve fuel efficiency in passenger vehicles by 2031-32. The draft introduces carbon neutrality factors for biofuels and adjusts compliance formulas for different vehicle weights.
Why it matters
These regulations significantly impact the automotive industry's manufacturing strategy and the national transition toward greener transportation.
The story so far: The Centre on Thursday (July 17, 2026) released the third draft of the Corporate Average Fuel Efficiency (CAFE)-III norms for passenger vehicles, proposing to recognise ethanol, compressed biogas (CBG) and other biofuels in compliance calculations by allowing manufacturers specified reductions in declared tailpipe carbon dioxide emissions.
The draft, open for stakeholder comments until August 6, comes after a year-long tussle between manufacturers of small and large cars over the compliance formula.
It broadly retains the changes introduced in the second draft, including a flatter weight-adjustment curve than the original September 2025 proposal, reducing the compliance advantage for heavier SUVs while easing targets for lighter vehicles. Overall fleet-wide emission targets have also been relaxed by around 21% compared with the original proposal.
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