Draft CAFE-III Norms for Vehicle Fuel Efficiency

#GS-3 #Environment #Climate Change #Sustainable Development #Economy #Energy #National

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The **Ministry of Power** and the **Bureau of Energy Efficiency (BEE)** have released the **Draft Corporate Average Fuel Economy-III (CAFE-III) norms** for public and industry feedback.

**Corporate Average Fuel Efficiency (CAFE)** rules force vehicle makers to meet a set average for fuel savings and CO2 emissions across their **entire annual fleet of vehicles sold**, instead of rating each car model separately.

**Phase I (CAFE-I)** began in **FY2017-18** to set the first baseline for tracking vehicle fleet efficiency.
**Phase II (CAFE-II)** started in **FY2022-23** and introduced stricter emission rules based on average vehicle weight.
**Phase III (CAFE-III)** was issued in **July 2026** and will take effect on **April 1, 2027**, running until **FY2031-32**.

The government applies these rules under the **Energy Conservation Act** to reduce air pollution, cut greenhouse gases, and lower crude oil imports by encouraging cleaner vehicles.

Carbon emission targets will become much stricter, falling from **3.996 liters/100 km (94.76 gCO₂/km)** in **FY2027-28** to **3.327 liters/100 km (78.90 gCO₂/km)** by **FY2031-32**.
The draft replaces the old lab-based **Modified Indian Driving Cycle (MIDC)** with the global **Worldwide Harmonised Light Vehicles Test Procedure (WLTP)** to match real road conditions.
Automakers get flexibility through multi-year compliance blocks, split into a **three-year block (FY28-30)** and a **two-year block (FY30-32)**, giving them time to launch electric vehicles.
India introduces **Carbon Neutrality Factors (CNFs)** for the first time, giving an **8%** credit benefit to **E20** fuel and up to **22.3%** to flex-fuel ethanol cars and flex-fuel hybrids.
Revised super-credit incentives grant a **3.0x** multiplier for **Battery Electric Vehicles (BEVs)** and Range-Extended EVs, **2.5x** for Plug-in Hybrids, and **1.6x** for Strong Hybrids.
A credit trading market lets companies that perform better than their emission targets earn compliance credits and sell them to other manufacturers.
Companies can claim up to **9 gCO₂/km** in benefits by using **12** approved fuel-saving features, such as automatic engine start-stop, regenerative braking, smart alternators, and **Tire Pressure Monitoring Systems (TPMS)**.