The Centre has released a third draft of Corporate Average Fuel Efficiency (CAFE) III norms for passenger vehicles and opened the proposal for stakeholder consultation until 6 August 2026. The draft matters because it sets the next phase of India’s fuel-efficiency regulation from April 2027 and directly affects how the automobile industry will meet fleet-emission targets.
CAFE norms are part of India’s cleaner-mobility policy architecture. The latest draft changes the balance between environmental ambition and compliance flexibility by relaxing the original proposal, retaining a flatter weight-adjustment curve, and adding carbon-neutrality factors for some alternative fuels.
What changed in the third draft
The draft retains a flatter weight-adjustment curve than the original proposal. The policy effect is significant: the revision reduces the advantage for heavier sport utility vehicles, while making targets easier for cars below the industry-average weight of 1,229 kg.
The overall fleet-emission targets have been relaxed by about 21% from the original draft. Manufacturers would need to improve fleet efficiency in stages from 3.996 litres per 100 km in 2027-28 to 3.327 litres per 100 km by 2031-32.
The proposal also changes the compliance framework. Unlike the current system, compliance would be assessed across two blocks rather than annually.
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