The Ministry of Power has sent the Corporate Average Fuel Efficiency (CAFE-3) norms proposal to the Prime Minister’s Office for approval after stakeholder consultations, Heavy Industries Minister HD Kumaraswamy said on Wednesday.
The ministry held discussions with industry representatives before forwarding the proposal, he told reporters on the sidelines of an event organised by FICCI. He did not disclose whether any changes had been made to the draft issued in September, or if the same proposal, which sought relief for small cars, has been sent to the PMO.
The CAFE-3 norms aim to tighten fuel efficiency standards and lower carbon emissions from passenger vehicles. Two drafts of CAFE 3 norms have come out till now, amid industry deliberations over their impact.
Under the CAFE framework, the government prescribes a minimum average fuel efficiency target and a ceiling on carbon dioxide emissions for a carmaker’s overall fleet. Compliance is determined on the weighted average of all vehicles sold by a manufacturer, rather than on individual models.
The second draft of CAFE-3, released in September 2025, sought to make average CO₂ emissions stricter from April 2027 while offering specific relief for small petrol cars.
Vehicles under four metres in length, with engines up to 1,200 cc and an unladen weight up to 909 kg, could have claimed an additional 3 g CO₂/km reduction - capped at 9 g/km per model - when calculating fleet-wide performance.
The relief proposed for small cars, seen as a benefit to Maruti Suzuki which continues to manufacture them, has faced sharp criticism from SUV makers. Reports indicate that the draft has since been amended to remove some of the small‑car relief that was initially considered.
Tighter standards could raise costs in some segments, particularly entry‑level petrol cars, as manufacturers may need to deploy additional fuel‑saving technologies to meet the targets. While this may pressure price‑sensitive buyers, it also signals a structural shift in India’s auto market, where compliance costs could accelerate the transition toward hybrids and EVs as more viable long‑term options.