India’s CAFE-3 proposal sparks industry debate over tougher emission targets
The proposed Corporate Average Fuel Efficiency (CAFE) 3 regulations have triggered a fresh round of disagreements within India’s automotive sector, with industry body SIAM raising objections to several key changes in the revised draft. The Bureau of Energy Efficiency (BEE) issued the updated proposal in September, outlining new fleet-wide emission thresholds and adjustments to incentives for electric and hybrid vehicles. The norms are expected to apply from 2027–28 for a five-year period.
A major flashpoint is the proposal to count battery electric vehicles (BEVs) as emitting 29 grams of CO2, instead of assigning them a zero tailpipe value as done previously. While SIAM maintains that BEVs should retain a zero-emission classification in line with past CAFE norms and to support India’s electrification goals, government officials argue the revised metric reflects the carbon intensity of electricity used for charging. According to a senior official, at least 30% of India’s grid still relies on non-renewable power, prompting the ministry to factor in indirect emissions.
Another key disagreement concerns the proposed fleet-wide emission target of 71.5 grams by 2032, a level SIAM says amounts to a 63% reduction from the current CAFE-2 benchmarks. The association contends that such a steep trajectory could lead to premature scrappage of compliant vehicles and put pressure on carmakers as well as component suppliers. SIAM has instead recommended a target of 89.6 grams. Government officials, however, believe that gradual yearly tightening – as suggested by BEE – remains necessary to ensure consistent progress rather than back-loaded compliance in the final year.
The revised draft also reworks super credits, the regulatory mechanism that allows automakers to count low-emission models multiple times when calculating fleet averages. Under the latest proposal, BEV credits are reduced from four to three, incentives for strong hybrids increase to two credits and a new category – range-extender EVs – enters with three credits. SIAM has said these changes run counter to the government’s stated push for EV and fuel-cell technologies.
While these proposals have sparked internal industry debates, the most publicised point of contention remains the additional 3-gram relaxation for cars weighing up to 909 kg. Carmakers with a strong small-car portfolio want the exemption to stay, arguing these vehicles have different engineering constraints. OEMs focused on larger models, however, prefer uniform standards across the board. Officials say they are cautious about allowing bigger vehicles a longer runway to meet tighter norms, although no final decision has been taken.
With ministries including road transport, heavy industries, and power involved in the finalisation process, the CAFE-3 framework may undergo further refinement. According to a government official, the concluding norms could end up tightening fleet-wide emission limits by 20–25%, aiming to align regulations with real-world performance data currently being assessed by ICAT.
A final notification is expected only after inter-ministerial consultation but the debate highlights the differing priorities of OEMs as India prepares for the next phase of emissions regulation.
