India’s upcoming Corporate Average Fuel Consumption (CAFE) Stage 3 norms are set to be less stringent than previously proposed, according to the latest draft, with revised calculations offering relatively greater relief to smaller cars while moderating incentives for alternative fuel technologies.
The updated proposal retains the same methodology for determining fuel efficiency targets but alters key constants that shape the emissions curve. These adjustments effectively flatten the curve, allowing higher permissible carbon dioxide output for vehicles across weight categories compared to the earlier draft released in September.
One of the most notable changes is the recalibration of parameters used to define compliance thresholds. The multiplier has been lowered, while both the reference vehicle weight and baseline fuel consumption figures have been increased for the initial implementation year of 2027–28. Together, these revisions raise the allowable emissions level for a given vehicle weight, easing the burden on manufacturers to meet stringent targets.
Because CAFE norms are linked to vehicle mass, the impact of this revised curve varies across segments. Smaller cars, which fall well below the reference weight, are likely to see a more pronounced benefit from the relaxed limits. Larger vehicles, including SUVs, also gain some headroom, though the relative advantage is less significant.
In the earlier draft, policymakers had proposed a direct concession for small petrol cars measuring under four metres, offering an additional carbon dioxide relaxation per kilometre. This provision has now been removed. Instead, the revised curve incorporates a broader-based easing, distributing benefits more evenly rather than targeting a specific segment.
The draft also introduces changes to the super credit system, which allows low-emission vehicles to be counted more than once in a manufacturer’s fleet average. While battery electric vehicles retain a higher multiplier, the incentives for strong hybrids and flex-fuel vehicles have been scaled back compared to earlier proposals, signalling a more calibrated approach to technology incentives.
CAFE norms form a key part of India’s strategy to curb vehicular emissions and improve fuel efficiency under the Energy Conservation framework. These regulations apply to passenger vehicles within defined weight and seating limits, and the Stage 3 norms are scheduled to take effect from April 1, 2027.
The revised draft reflects a balancing act between tightening environmental standards and maintaining cost viability for manufacturers and consumers, particularly in price-sensitive segments.
