Decoding the New Emission Draft
The government has released draft rules for the third phase of Corporate Average Fuel Economy/Efficiency standards, known as CAFE-3. These norms don't target individual car models but instead require each automaker to meet a fleet-wide average for CO2
emissions. This average is calculated based on the number of cars a company sells in a year. The core idea is to make the entire fleet of new cars sold in the country more fuel-efficient, thereby reducing CO2 emissions. The new draft proposes a significant tightening of these limits, setting a clear, five-year roadmap from the financial year 2027-28 to 2031-32.
From CAFE-2 to a Stricter CAFE-3
India is currently under CAFE-2 norms, which came into effect in 2022 and set a target of 113 grams of CO2 per kilometre. The proposed CAFE-3 rules are far more ambitious. Starting from FY28, the target is set to become progressively tighter each year. It begins with a fleet average of about 94.76 g/km in FY28 and aims for a stringent 78.90 g/km by FY32. This represents a reduction of nearly 30% from current levels by the end of the cycle. Furthermore, the testing method is set to shift from the Modified Indian Driving Cycle (MIDC) to the more realistic Worldwide Harmonised Light Vehicles Test Procedure (WLTP), which better reflects on-road driving conditions.
The Challenge for Carmakers
Automakers will face a significant challenge to meet these targets. Simply improving the efficiency of petrol and diesel engines may no longer be enough. To bring their fleet average down, manufacturers will need to sell a higher mix of cleaner vehicles. This means accelerating the adoption of technologies like strong hybrids, plug-in hybrids, and fully electric vehicles (EVs). The draft rules encourage this shift by providing 'super credits' for selling EVs and other clean-tech vehicles, which gives them extra weight when calculating the fleet average. The proposal also introduces a credit trading system, allowing companies that beat their targets to sell credits to those who fall short.
What This Means for Your Next Car
For car buyers, these changes will have a noticeable impact. In the short term, the push for more advanced technology could lead to an increase in vehicle prices, as manufacturers invest in R&D and new components. However, the long-term benefit is a lower total cost of ownership due to significantly better fuel efficiency, which means saving money on petrol or diesel. The regulations will also expand consumer choice, with a wider variety of hybrid and electric models becoming available in the market. The draft also introduces a 'Carbon Neutrality Factor' for fuels like ethanol-blended petrol, which could give a compliance boost to cars that can run on them.
India's Road to Greener Mobility
These regulations are a critical part of India's larger goals. The transport sector is a major contributor to CO2 emissions and urban air pollution. By enforcing stricter fuel efficiency, the government aims to reduce the country's dependence on imported crude oil, improve air quality in cities, and move closer to its international climate commitments, including the goal of achieving net-zero emissions by 2070. While the transition will be demanding for the auto industry, the CAFE-3 norms signal a firm policy direction towards a more sustainable and environmentally conscious future for mobility in India. The proposal is currently open for feedback from stakeholders before being finalised.
