India's proposed CAFE-3 emissions regulations will tighten fuel efficiency standards from 2027 to 2032, requiring automakers to meet stricter targets that may accelerate electrification while raising debates over small-car exemptions and affordability.
02 Feb 2026 | 256 Views | By Prerna Lidhoo
India is about to rewrite the rules for how clean your next car has to be.
From 2027 to 2032, the government’s draft CAFE-3 norms (Corporate Average Fuel Efficiency – Phase III) will sharply tighten fuel consumption and CO₂ targets for every carmaker operating in India. The impact? Higher ...
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India is about to rewrite the rules for how clean your next car has to be.
From 2027 to 2032, the government’s draft CAFE-3 norms (Corporate Average Fuel Efficiency – Phase III) will sharply tighten fuel consumption and CO₂ targets for every carmaker operating in India. The impact? Higher prices, new model strategies, more hybrids and EVs — and a serious question mark over the future of small cars.
In this episode of Autocar Professional POV, we break down what CAFE-3 really means, why the industry is split down the middle, and how this policy could reshape India’s passenger vehicle market.
What we cover:
• What CAFE-3 is and how much stricter it gets (3.73 to 3.01 L/100 km)
• Why India is moving to WLTP and why it makes compliance tougher for small cars
• Why EVs and strong hybrids suddenly matter more than ever
• The big industry flashpoint: Maruti–Toyota’s 909 kg small-car exemption proposal
• Why Maruti & Toyota say uniform rules could kill affordable hatchbacks
• Why Tata, Hyundai, Mahindra, Kia & MG say the exemption risks safety and fairness
• How CAFE-3 could accelerate hybrids, EVs and the SUV shift
• What global markets (US, Europe, Japan) can teach India
• And the real question policymakers must answer:
Can India go cleaner without compromising safety or affordability?
CAFE-3 could be the most disruptive auto policy since BS6.
Whether the 909 kg carve-out is approved or scrapped, one thing is clear: cars in India are about to get cleaner, more efficient, and more electrified.
The challenge is doing it without pricing small cars out or making them unsafe.
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