+
CAFE-III Gives Auto Industry Investment Clarity
ECONOMY & POLICY

CAFE-III Gives Auto Industry Investment Clarity

The government’s new Corporate Average Fuel Economy (CAFE-III) norms have provided the automobile industry with a clearer framework for technology investments, according to industry representatives. The framework seeks to balance environmental objectives with flexibility for manufacturers while encouraging the adoption of flex-fuel vehicles and biofuels.

Society of Indian Automobile Manufacturers (SIAM) President Shenu Agarwal said the five-year framework would give automakers greater predictability to plan investments and accelerate innovation. He said the regulation established annual targets through a market-based compliance mechanism and would help reduce fuel consumption from new passenger vehicles while allowing companies to pursue different technology pathways.

Mahindra President, Automotive Business, Velusamy R said the framework balanced environmental requirements with what was achievable for the industry and would also strengthen India’s energy security. He highlighted compliance blocks, technology credits, cleaner-fuel benefits and super credits for electric vehicles and other advanced technologies as provisions that could support manufacturers in meeting the targets.

The new CAFE norms will take effect on April 1, 2027, and target a 16.7 per cent improvement in passenger vehicle fuel efficiency by 2032. The framework recognises alternative fuels and cleaner technologies, including ethanol-blended petrol, biofuels, electric vehicles, hybrids and flex-fuel vehicles (FFVs), while setting a trajectory through 2031-32.

All India Distillers’ Association President Vijendra Singh said the framework could strengthen the relationship between India’s ethanol industry and clean mobility. He said recognition of ethanol and FFVs through a 22.3 per cent Carbon Neutrality Factor and a 1.1x super-credit would improve policy visibility for biofuels. Singh added that vehicle availability, fuel infrastructure and consumer awareness would be needed to expand the FFV ecosystem and translate India’s ethanol capacity into wider clean mobility adoption.

The government’s new Corporate Average Fuel Economy (CAFE-III) norms have provided the automobile industry with a clearer framework for technology investments, according to industry representatives. The framework seeks to balance environmental objectives with flexibility for manufacturers while encouraging the adoption of flex-fuel vehicles and biofuels. Society of Indian Automobile Manufacturers (SIAM) President Shenu Agarwal said the five-year framework would give automakers greater predictability to plan investments and accelerate innovation. He said the regulation established annual targets through a market-based compliance mechanism and would help reduce fuel consumption from new passenger vehicles while allowing companies to pursue different technology pathways. Mahindra President, Automotive Business, Velusamy R said the framework balanced environmental requirements with what was achievable for the industry and would also strengthen India’s energy security. He highlighted compliance blocks, technology credits, cleaner-fuel benefits and super credits for electric vehicles and other advanced technologies as provisions that could support manufacturers in meeting the targets. The new CAFE norms will take effect on April 1, 2027, and target a 16.7 per cent improvement in passenger vehicle fuel efficiency by 2032. The framework recognises alternative fuels and cleaner technologies, including ethanol-blended petrol, biofuels, electric vehicles, hybrids and flex-fuel vehicles (FFVs), while setting a trajectory through 2031-32. All India Distillers’ Association President Vijendra Singh said the framework could strengthen the relationship between India’s ethanol industry and clean mobility. He said recognition of ethanol and FFVs through a 22.3 per cent Carbon Neutrality Factor and a 1.1x super-credit would improve policy visibility for biofuels. Singh added that vehicle availability, fuel infrastructure and consumer awareness would be needed to expand the FFV ecosystem and translate India’s ethanol capacity into wider clean mobility adoption.

Related Stories

Gold Stories

Next Story
Infrastructure Energy

Mines Ministry to Auction Two Offshore Mineral Blocks in Andaman Sea

The Ministry of Mines will launch an auction of two offshore mineral blocks in the Andaman Sea on Thursday, seeking to unlock India’s offshore mineral potential and strengthen long-term mineral resource security. The blocks will be offered under a composite licence, which permits exploration and development activities in accordance with the applicable regulatory framework. The ministry said the auction was intended to encourage systematic exploration, attract investment and promote the use of advanced technologies for offshore mineral exploration and development. The initiative is also aimed..

Next Story
Infrastructure Energy

India Invites Global Mining Community to India Mining Week 2026

India has invited the global mining community to participate in India Mining Week 2026, seeking international collaboration, expertise and investment to support the development of the country’s mining and minerals sector. The event is scheduled to be held from November 15 to 17, 2026, at Yashobhoomi in New Delhi. Coal Additional Secretary Rupinder Brar extended the invitation while addressing India Mining: Global Connect, an international outreach interaction involving representatives from diplomatic missions in 19 countries. The meeting focused on opportunities for greater international par..

Next Story
Infrastructure Energy

CAG Flags Rs. 9.76 bn Coal Mining Irregularities in Odisha

The Comptroller and Auditor General (CAG) has flagged violations of environmental clearance (EC) conditions at two coal mines operated by Mahanadi Coalfields in Odisha. The compliance audit for the year ended March 2024 found excess or unauthorised production of nearly 11.8 mn tonnes of coal. The audit assessed the potential recoverable amount under the Mines and Minerals (Development and Regulation) Act, 1957, at Rs. 9.76 bn. The findings relate to the Kalinga Open Cast Project in Talcher and the Kulda Open Cast Project in Rourkela, where production exceeded applicable EC conditions or limits..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

SPECIAL OFFER
QR Code