Govt rolls out CAFE-3 norms from April 2027

The government has notified CAFE-3 norms for automakers, effective from April 2027 to March 2032. The final rules remove a separate concession for small petrol cars but retain super-credits for EVs, hybrids and other cleaner vehicle

New Delhi: The government has notified new Corporate Average Fuel Economy (CAFE-3) norms for automakers, removing a separate concession proposed for small petrol cars.

The norms, notified by the Ministry of Power, will come into effect from April 2027 and remain in force until March 2032.

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However, the Centre had proposed a 3 grams per km concession for petrol cars weighing up to 909 kg last year. The concession was opposed by several leading automakers.

The final rules do not provide a separate concession for cars weighing below 909 kg.

Instead, the government has changed the formula used to calculate a manufacturer’s fleet-wide carbon dioxide emissions target.

The reference vehicle weight has been increased to 1,229 kg from 1,170 kg in the September 2025 draft. The final rules also use a lower annual weight adjustment.

The changes provide relatively more relief to lighter vehicle fleets while making the targets stricter for heavier fleets.

Under the final formula, a 909-kg car has an FY28 emissions target of about 82.8 grams of CO2 per km, compared with about 76 grams under the September 2025 draft. For a 2,500-kg vehicle, however, the target is about 142.4 grams under the final formula, compared with about 151.4 grams under the earlier formula.

In addition, the final CAFE-3 rules retain incentives for cleaner vehicles through a super-credit mechanism.

One battery electric vehicle will be counted as three vehicles for calculating a manufacturer’s fleet performance.

The same 3x factor applies to range-extended electric vehicles.

Plug-in hybrids and strong hybrids running on flex-fuel will get a 2.5x factor, while strong hybrids will get a 1.6x factor. Flex-fuel vehicles will get a 1.1x factor.

The rules also introduce a credit-debit system.

Manufacturers that perform better than their emissions targets will earn credits, while those falling short will accumulate debits.