CAFE III norms to take effect from April 2027; deadline unlikely to be extended

Automakers will have to comply with the third cycle of Corporate Average Fuel Efficiency (CAFE III) norms from April 1, 2027, with the government unlikely to extend the implementation deadline. According to PTI, Hanif Qureshi, additional secretary in the Ministry of Heavy Industries, said there may not be a need to push the deadline further, as the government has been in regular consultation with industry stakeholders and has sought feedback throughout the process.

The proposed CAFE III regulations will be in force from April 1, 2027, to March 31, 2032. These norms will require manufacturers to meet stricter fleet-wide fuel efficiency and CO2 emission targets.

1. Revised curve benefits small cars despite the removal of the 3g CO2/km relief
2. Super credits for hybrids and flex-fuel vehicles reduced in draft
3. Credit trading and flexible compliance mechanisms under consideration

Industry divided over small-car benefits

Automakers remain divided on key aspects of the framework. Smaller car manufacturers have sought leniency in the norms based on vehicle weight and affordability, while larger OEMs have opposed any differential treatment, citing concerns around safety and technology costs.

Companies such as Maruti Suzuki and Toyota Kirloskar Motor have supported benefits for small cars. Meanwhile, Tata Motors, Mahindra & Mahindra, Hyundai and Kia have opposed special provisions.

Draft norms propose softer targets

The latest draft of the CAFE III norms proposes a relaxation in emission targets compared to earlier proposals. Changes to the formula, including a revised multiplier and a higher reference weight, result in a flatter efficiency curve that allows slightly higher emissions for a given vehicle weight.

The earlier proposal for an additional 3g CO2/km benefit for small cars has also been removed, with the easing now incorporated into the revised curve.

The draft also proposes reducing super-credit benefits for strong hybrids (from 2.0 to 1.6) and flex-fuel vehicles (from 1.5 to 1.1), while EVs continue to be counted as three vehicles.

Final framework under discussion

Sources told PTI that the government has called a high-level meeting on April 16 to deliberate on the draft CAFE III framework, with officials from ministries including Power, Heavy Industries and Road Transport & Highways expected to participate.

The draft CAFE III framework is also expected to introduce a more flexible compliance mechanism. It proposes easing penalty provisions and allowing automakers that exceed emission targets to trade surplus carbon credits with those that fall short. 

Additionally, OEMs may be allowed to offset deficits by purchasing credits from the Bureau of Energy Efficiency (BEE), according to sources. The final notification is expected after stakeholder consultations and inter-ministerial discussions.