The Ministry of Power on Thursday released Draft Corporate Average Fuel Economy 2027 Norms (CAFE-III) and sought suggestions from stakeholders, according to a ministry statement. The new norms will replace the existing CAFE-II norms, which are likely to expire on March 31, 2027.
The draft norms apply to M1 category passenger vehicles — those with up to eight seats in addition to the driver's seat — manufactured or imported for sale in India during the period 2027-28 to 2031-32.
Fuel Consumption Targets and Compliance Blocks
Under the proposed CAFE III framework, compliance will be assessed over two blocks: an initial block of three years (2027-28 to 2029-30) followed by a second block of two years (2030-31 to 2031-32), according to an official. The fuel consumption targets are to be progressively tightened:
| Compliance Year | Fuel Consumption Target (litres/100 km) | CO₂ Target (gCO₂/km) |
|---|---|---|
| 2027-28 | 3.996 | 94.76 |
| 2031-32 | 3.3273 | 78.90 |
The phased tightening will provide original equipment manufacturers (OEMs) with a clear regulatory pathway to develop more fuel-efficient vehicle models, the official said.
Recognition of Carbon-Neutral Fuels
For the first time, the CAFE III norms will recognise the carbon-neutrality of ethanol, bio-fuel and compressed bio-gas (CBG). According to the official, a carbon neutrality factor (CNF) of 8 per cent shall be considered for present levels of ethanol blending. For CBG and bio-fuel, the reduction will be based on the prevailing actual blending level. This allows a specified reduction in declared tailpipe CO₂ emissions before compliance assessment.
Compliance Benefits for Fuel-Saving Technologies
Manufacturers will be eligible to claim up to 9 gCO₂/km of compliance benefit for approved fuel-saving technologies, subject to a maximum benefit of 1 gCO₂/km per technology.
Stakeholder Consultation and Next Steps
Stakeholders and the public may submit their suggestions and feedback by August 6, 2026 via email or post to the under secretary, energy conservation, the ministry stated. The draft norms will be uploaded on the websites of the Ministry of Power and the Bureau of Energy Efficiency shortly.
These proposed norms underscore India's ongoing efforts to reduce vehicle emissions and align with global fuel economy trends. For trade compliance professionals, the key takeaway is that importers of M1 passenger vehicles into India must plan for these tighter standards and the new carbon-neutrality recognition provisions, which could affect duty and regulatory compliance strategies.
Sources:
