CAFE III Norms 2027: Govt Tightens Fuel Efficiency Rules For Cars, EVs Get Super Credits
India plans to enhance fuel-efficiency standards for passenger vehicles through updated Corporate Average Fuel Economy (CAFE) norms, effective from April 1, 2027, to March 31, 2032.
CAFE III Norms 2027: Govt Tightens Fuel Efficiency Rules For Cars, EVs Get Super Credits. (Image: AI-Generated)
India is set to tighten fuel-efficiency requirements for passenger vehicles as the government has notified the next phase of Corporate Average Fuel Economy (CAFE) norms. The new rules will push carmakers to improve the average fuel efficiency of their vehicle fleets while giving additional compliance benefits to cleaner technologies such as electric vehicles and plug-in hybrids.
Key Highlights:
- New CAFE norms to apply from April 1, 2027, to March 31, 2032
- Fuel-consumption benchmark to improve by around 16.7% over five years
- EVs, plug-in hybrids and flex-fuel vehicles to get super credits
- Automakers with annual sales below 1,000 units to remain exempt
Under the new rules, the fuel-consumption benchmark will become progressively tighter each year. It will move from 3.9960 litres per 100 km in 2027-28 to 3.3273 litres per 100 km in 2031-32, translating into an overall improvement of around 16.7% over the five-year period.
The targets will also take vehicle weight into account. Lighter vehicles will have relatively softer targets, while heavier vehicles will face higher fuel-efficiency requirements. The reference weight has been increased from 1,082 kg to 1,229 kg, an increase of around 13.6%.
CAFE norms are designed to regulate the sales-weighted average fuel consumption of an automaker's passenger vehicle fleet. India introduced the first CAFE norms in 2017, with the second phase coming into effect in 2022-23.
EVs, Hybrids and Flex-Fuel Cars Get Super Credits
The new framework provides super credits for battery electric vehicles (BEVs), plug-in hybrid electric vehicles (PHEVs) and flex-fuel vehicles when calculating a manufacturer's fleet average.
Electric vehicles will receive the highest benefit, while flex-fuel vehicles will get lower credits, with plug-in hybrids positioned between the two. The mechanism is intended to encourage manufacturers to introduce and sell vehicles using cleaner or more fuel-efficient technologies.
The government has also expanded the list of recognised fuel-conservation technologies from four to 12. The expanded list includes technologies such as start-stop systems, tyre pressure monitoring systems and regenerative braking. This gives manufacturers more technical options to improve fleet-level fuel efficiency without relying on a single type of powertrain.
Automakers Get More Compliance Flexibility
Manufacturers will also be able to manage their compliance requirements through specified two-year and three-year compliance blocks. This is expected to give carmakers more flexibility as they transition their product portfolios towards newer and more efficient technologies.
Small-volume manufacturers will continue to receive an exemption. Companies with annual sales of less than 1,000 units will not be subject to the fleet-average compliance requirement. The draft framework had defined such manufacturers as those producing or importing fewer than 1,000 vehicles in a reporting period.
End Article
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