The government has notified new Corporate Average Fuel Economy (CAFE-3) norms that will establish fuel-efficiency and carbon-emission limits for passenger vehicles from April 1, 2027, to March 31, 2032. The rules apply to new passenger vehicles manufactured or imported for sale in India, the power ministry said in a statement.

The framework covers passenger cars, including hatchbacks, sedans, special utility vehicles and multi-purpose vehicles with seating for eight passengers apart from the driver. It removes a concession proposed in the draft regulations for lightweight petrol cars weighing less than 909 kg and introduces a flattened target line that provides relatively softer requirements for lighter vehicles and stricter targets for heavier models.

The reference weight has been raised from 1,082 kg under the existing norms to 1,229 kg under CAFE-3, an increase of around 13.6 per cent. The fuel-consumption benchmark will tighten from 3.996 litres per 100 km in 2027-28 to 3.3273 litres per 100 km in 2031-32, representing an improvement of around 16.7 per cent over the period.

The rules offer manufacturers flexibility to use cleaner technologies, alternative fuels and other solutions. Battery Electric Vehicles (BEVs), Range-Extended Electric Vehicles (REEVs), Plug-in Hybrid Electric Vehicles (PHEVs), Strong Hybrid Electric Vehicles (SHEVs) and flex-fuel vehicles will receive volume-based multipliers, commonly known as super credits, when fleet-average emissions are calculated.

The ministry said the framework would support the deployment of cleaner vehicle technologies and encourage innovation in areas such as solar-reflective paints, advanced glazing and high-efficiency air-conditioning. A credit-debit mechanism will allow manufacturers exceeding their targets to carry credits forward, while those falling short can use past credits, trade credits with other automakers or purchase them through a Bureau of Energy Efficiency-administered programme. The norms are intended to improve fuel economy progressively across all five years and support India’s energy security, sustainability and increasing vehicle electrification.