The third phase of Corporate Average Fuel Economy norms will run from April 2027 to March 2032, targeting a 16.7 per cent efficiency gain with super credits for EVs.

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• The Ministry of Power has notified the third phase of Corporate Average Fuel Economy norms, known as CAFE-III, for passenger vehicles.
• The norms apply from April 1, 2027 to March 31, 2032 to M1-category passenger vehicles made in or imported into India.
• CAFE norms cap the average fuel consumption and carbon dioxide emissions of a manufacturer's passenger vehicle fleet, and were introduced in 2017 under the Energy Conservation Act, 2001.
• The fleet target tightens from 3.996 litres per 100 km in 2027-28 to 3.3273 litres per 100 km in 2031-32, an improvement of 16.7 per cent.
• Targets are weight-based, and the reference weight rises from 1,082 kg to 1,229 kg.
• The draft had proposed a concession for petrol cars under 909 kg, but the final norms dropped it in favour of a flatter, weight-sensitive target line.
• Battery electric and range-extended electric vehicles receive a 3.0 super credit multiplier.
• Cars running on E20 or higher ethanol blends, including strong and plug-in hybrids, get an 8 per cent carbon-neutrality factor on tailpipe CO2.
• CNG vehicles get a 5 per cent factor or the notified compressed biogas blending percentage, whichever is higher.
• The five-year period is split into two compliance blocks, and manufacturers can trade CAFE credits with each other.
• From April 1, 2027, manufacturers must declare each model's CO2 performance under both MIDC and WLTP, with a conversion factor to be notified separately.
• Manufacturers producing fewer than 1,000 units annually fall outside the norms.