New fuel efficiency rules under review, CAFE-III proposal sent to PMO

The government has moved a step closer to finalising the next phase of fuel efficiency rules for passenger vehicles in India. Union Heavy Industries Minister H D Kumaraswamy said that the proposal for the upcoming Corporate Average Fuel Efficiency (CAFE)-III norms has been forwarded to the Prime Minister’s Office after discussions with industry stakeholders and the power ministry, reported PTI.

According to Kumaraswamy, consultations have already taken place between the concerned ministries and automobile manufacturers. Following these discussions, the power ministry has submitted the proposal to the PMO for further consideration. The next set of regulations is expected to shape how carmakers plan their future product line-ups and technology investments.




However, the industry remains divided on some key aspects of the proposed rules, particularly on how small cars should be treated under the framework. Tata Motors Passenger Vehicles Managing Director and CEO Shailesh Chandra had earlier argued that small cars should not receive relaxed norms based on affordability or weight. He maintained that such concessions could lead to compromises in safety features and slow down progress towards cleaner mobility.

On the other hand, Maruti Suzuki has supported the idea of special consideration for small cars. Chairman R C Bhargava has stated that the original purpose of CAFE norms was to push larger vehicles to improve efficiency and reduce emissions.

The CAFE framework, introduced in 2017, sets limits on the average fuel consumption and carbon dioxide emissions across a manufacturer’s entire fleet. The second phase came into effect in 2022, and the third phase is expected to begin from April 2027.

Draft regulations for CAFE-III were released earlier by the Bureau of Energy Efficiency under the power ministry, and stakeholder feedback has been part of the ongoing process. Inputs from PTI.