New Cafe 3 Draft Eases Emission Limits; Small Cars To Benefit More From Flatter Curve

The new draft of Corporate Average Fuel Consumption (CAFE) Stage 3 norms proposes softer emission limits, more for small cars, compared to the draft released in September, while dropping a specific 3 g CO₂/km relaxation that had earlier been proposed for small cars.

Compared with the September draft, the latest draft keeps the same formula for calculating fuel-efficiency targets but revises the constants that determine the steepness of the curve. The multiplier has been reduced, the reference vehicle weight has been raised, and the baseline consumption level increased for each year.

These adjustments together shift the curve upward, meaning manufacturers are allowed slightly higher emissions for the same vehicle weight than under the September draft. The curve refers to the weighted-average target line that determines how much carbon dioxide a manufacturer's fleet is allowed to emit based on vehicle weight.

In the formula, the multiplier “a” has been reduced from 0.002 in the September proposal to 0.00158 in the first year of the new draft, while the reference vehicle weight “b” has been increased from 1,170 kg to 1,229 kg. The baseline consumption constant “c” has also been raised, from 3.7264 litres per 100 km earlier to 3.9960 litres per 100 km for 2027-28.

Together, these numerical changes shift the curve upward and make it flatter, allowing higher permissible emissions for the same vehicle weight than what was proposed in September.

In practical terms, the standards become less stringent overall, reducing the compliance gap that companies would otherwise have needed to bridge through efficiency improvements.

As targets are linked to vehicle mass, the impact of the revised curve is not uniform across segments. Smaller cars, which sit further below the reference weight, see a larger easing in their emission limits, while bigger vehicles and SUVs also benefit from the relaxation, though to a smaller extent.

The September draft had said that sub-4 m petrol vehicles can claim an additional reduction of 3 g CO₂/km in their manufacturer-declared CO₂ performance, with a cap on the total benefit at 9 g/km per model per year. This was widely viewed as a direct cushion for the small-car segment, which remains sensitive to cost increases.

However, the latest draft removes the explicit relaxation. Instead, the easing has been incorporated into the revised efficiency curve itself, resulting in a more general relaxation across vehicle categories rather than a targeted concession for a defined group of models.

Changes have also been made to the super credits system, which allows certain powertrains to be counted at a higher value when calculating compliance. The benefit assigned to strong hybrid vehicles has been reduced compared with the September proposal, and the factor for flex-fuel vehicles has also been trimmed. The incentives available for battery electric vehicles and plug-in hybrids remain unchanged.

CAFE norms, first introduced under the Energy Conservation Act, 2001, form a key part of India’s strategy to reduce fossil fuel dependence and mitigate air pollution from road transport. These fuel efficiency regulations are issued by the BEE and specifically apply to M1 category vehicles, which include passenger cars designed to seat up to nine persons and weigh a maximum of 3,500 kg.

The proposed standards are scheduled to come into force from April 1, 2027.