The Centre has notified the new Corporate Average Fuel Economy (CAFE-3) norms that set carbon emission limits for passenger vehicles. The norms will take effect from April 1, 2027, and remain in force until March 31, 2032

Under the new norms, the fuel-consumption benchmark will be tightened from 3.996 litres per 100 km in 2027–28 to 3.3273 litres per 100 km in 2031–32, amounting to an improvement of about 16.7% over the five-year period.

The new rules will apply to new passenger vehicles manufactured or imported for sale in India.

The new Corporate Average Fuel Efficiency framework will have targets tightening year-on-year across all five years. “The revised target line has also been flattened to provide a more balanced, weight sensitive approach, with relatively softer targets for lighter vehicles and greater fuel efficiency requirements for heavier vehicles,” according to the Ministry of Power.

The reference weight has been raised from 1,082 kg under the existing norms to 1,229 kg under the new framework, which is an increase of around 13.6 per cent, reflecting the shift towards heavier vehicles in the passenger car segment.

The norms also offer manufacturers a range of incentives and compliance pathways to encourage the adoption of cleaner fuels, technologies and more efficient vehicles. The framework recognises the role of renewable and low-carbon fuels, including ethanol-blended petrol, biofuels and compressed biogas (CBG), through the introduction of a Carbon Neutrality Factor (CNF).

Under the framework, manufacturers can avail of a concession of 1 g CO₂/km for each eligible technology, subject to an overall cap of 9.0 g