India’s proposed Carbon Average Fuel Efficiency-3, or CAFE-3, norms for cars have moved closer to consensus after a high-level inter-ministerial discussion. The draft framework, which will shape passenger vehicle carbon emission standards from 2027, has been under debate because of differences between small-car makers and larger manufacturers over compliance relaxations and weight-based treatment.
What CAFE-3 Norms Cover
CAFE norms set fleet-wide fuel efficiency and carbon dioxide emission targets for carmakers. Under CAFE-3, compliance is measured across a manufacturer’s overall sales mix rather than each vehicle individually. The aim is to reduce emissions from the transport sector while encouraging cleaner technologies, including electric vehicles.
Latest Draft Changes
The revised proposal uses a flatter compliance curve over five years instead of steep annual tightening. It also removes relaxations earlier offered to lighter vehicles. The slope has been adjusted from 0.002 in the first year to 0.00158, and from 0.002 to 0.00131 in the fifth year. The slope determines how emission targets vary with vehicle weight.
Industry Split and Negotiations
The earlier draft had divided the industry. Small-car makers argued that weight-based relaxations were necessary for their product mix. Larger manufacturers said such carve-outs shifted the burden onto firms that had invested more in EVs and cleaner technologies. In the latest round, industry sources indicated broad agreement, though some small car makers still sought minor changes.
Super Credit Scheme and EV Impact
The draft retains a super credit mechanism for battery electric vehicles and range-extended electric vehicles, with the maximum credit value set at 3. This means each EV sold can count as multiple vehicles for compliance purposes. The scheme is designed to improve fleet averages and help manufacturers meet emission targets more easily.
Last Modified: April 27, 2026