Ministry of Power forwards CAFE-III norms to PMO after stakeholder talks

The proposed third phase of India’s fuel efficiency regulations has moved a step closer to a decision. The Ministry of Power has forwarded the Corporate Average Fuel Efficiency (CAFE)-III proposal to the Prime Minister’s Office (PMO) after consultations with industry stakeholders, Union Heavy Industries Minister H D Kumaraswamy said on Wednesday.

Speaking to reporters, Kumaraswamy confirmed that discussions had already taken place between automakers and the power ministry. “We already had a meeting with stakeholders and the power ministry. The power ministry, according to my information, after the meeting with stakeholders, has sent the proposal to the PMO," he said.

Industry divided over small car treatment

Even as the proposal advances, divisions within the auto industry have become increasingly visible. A key point of contention is whether small cars should receive special consideration under the upcoming norms, particularly in terms of weight-based calculations and affordability criteria.

In November, Tata Motors Passenger Vehicles Managing Director and CEO Shailesh Chandra argued against granting leniency to smaller vehicles. He maintained that easing norms on the basis of weight or affordability could dilute safety standards and divert attention from meaningful progress towards sustainable mobility.

On the other hand, Maruti Suzuki India, the country’s largest carmaker by volume, has supported concessions for small cars. Chairman R C Bhargava has previously stated that the core objective of CAFE regulations is to compel larger vehicles to improve fuel efficiency and lower emissions, rather than penalising compact and entry-level cars that already consume less fuel.

What CAFE norms aim to achieve

Introduced in 2017, the CAFE framework sets limits on the average fuel consumption and carbon dioxide emissions across a manufacturer’s entire fleet. Instead of evaluating individual models in isolation, the rules calculate a company’s overall performance, encouraging a shift towards cleaner and more efficient vehicles.

The second phase, CAFE-II, came into effect in 2022. The third phase, CAFE-III, is expected to be implemented from April 2027. Fresh parameters are currently under discussion with the Bureau of Energy Efficiency (BEE), which functions under the Ministry of Power.

With the proposal now at the PMO, the final contours of CAFE-III, including how small cars are treated, will be closely watched by manufacturers, policymakers and consumers alike.

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