The Ministry of Power has released the draft Corporate Average Fuel Economy 2027 Norms (CAFE-III) for stakeholder feedback. These norms introduce a fresh five-year fuel efficiency plan for passenger vehicles, set to commence on April 1, 2027. The regulations specifically target M1 category vehicles, encompassing passenger cars that can carry up to eight individuals, excluding commercial goods carriers and buses.
The proposed CAFE-III norms are designed to replace the existing CAFE-II regulations, which are expected to expire on March 31, 2027. The compliance process for CAFE-III will be split into two phases, with the first phase spanning three years and the second phase covering the remaining two years. Over time, the fuel efficiency targets will progressively become more stringent.
Under the oversight of the Bureau of Energy Efficiency within the Ministry of Power, the framework aims to reduce average fleet emissions significantly by FY32, as outlined in previous drafts. Automakers will be able to earn compliance credits priced at Rs 2,500 each, with the price increasing by Rs 500 annually. Any unused credits will expire at the end of the compliance period, and manufacturers failing to meet targets may face penalties, the specific amounts of which are yet to be disclosed.
Industry responses to the draft have varied. While the Society of Indian Automobile Manufacturers (SIAM) has supported the proposal for its balanced approach, some carmakers have sought relief for small petrol cars, and others have opposed differentiated treatment for this segment. Stakeholders and the public have been invited to provide feedback on the draft norms, with submissions accepted until August 6, 2026. The draft regulations will be available on the Ministry of Power and Bureau of Energy Efficiency websites soon.
