Centre notifies CAFE-III fuel-efficiency norms for passenger vehicles from 2027
The Centre notified the Corporate Average Fuel Economy (CAFE-III) norms on September 29, tightening fleet-wide fuel-efficiency targets for passenger vehicles from April 1, 2027, to March 31, 2032. The final rules drop a proposed concession for small petrol cars, revise the weight-based target formula and give super-credits to electric, hybrid and flex-fuel vehicles.
Syllabus: Prelims · Environment & Ecology; GS3 · Infrastructure; GS2 · Government Policies
Why it matters
For a car buyer, the rules shape the models carmakers plan and promote from April 2027. The fleet target at the reference weight falls about 16.7% by 2031-32, so makers gain from selling more electric, hybrid and ethanol-ready cars and from fitting fuel-saving technology, all of which the formula rewards. A maker that still falls short must buy credits from rivals on agreed terms or from BEE at up to Rs 4,500 per g CO2/km, or face penalties under the Energy Conservation Act. Passenger vehicles take a substantial share of India's transport energy and fossil-fuel use, the Ministry of Power notes, so a more efficient fleet serves both energy security and sustainability.
Prelims pointers
- Energy Conservation Act, 2001: Section 14 lets the Centre set energy consumption standards; CAFE norms are issued under it in consultation with the Bureau of Energy Efficiency.
- Bureau of Energy Efficiency: the statutory body set up under the Energy Conservation Act, 2001, working under the Ministry of Power.
- CAFE norms in force since 2017-18 were notified in April 2015 (S.O. 1072(E)); a tighter phase began in 2022-23, and CAFE-III follows from 2027-28.
- M1 category under the Central Motor Vehicles Rules, 1989: passenger vehicles with up to eight seats besides the driver's, such as hatchbacks, sedans, SUVs and MPVs.
- Manufacturers with fewer than 1,000 eligible vehicles a year are exempt from the CAFE target but must still report their fuel consumption.
- Carmakers must declare each model's CO2 on both the MIDC and the Worldwide Harmonized Light Vehicles Test Procedure (WLTP) from April 1, 2027.
- The Ministry of Road Transport and Highways enforces CAFE testing, reporting and conformity of production under the Central Motor Vehicles Rules, 1989.
Practise a UPSC-style question
Consider the following statements about the notified CAFE-III norms:
1. The final rules retain a separate 3 g/km benefit for petrol cars weighing up to 909 kg.
2. They apply to eligible new M1 passenger vehicles manufactured or imported for sale in India.
3. Very small manufacturers remain exempt from the fleet-average target, while reporting requirements still apply.
Which of the statements given above is/are correct?
- (a) 1 and 2 only
- (b) 2 and 3 only
- (c) 1 and 3 only
- (d) 1, 2 and 3
Show the answer
Answer: (b) 2 and 3 only
1 is incorrect: the extra 3 g CO2/km for petrol cars up to 909 kg was in the Bureau of Energy Efficiency's September 2025 draft and is not in the final rules. 2 is correct: the norms cover new M1 category passenger vehicles made or imported for sale in India. 3 is correct: manufacturers with fewer than 1,000 eligible vehicles a year are exempt from the target but must still report their fuel consumption.
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