Government Releases Revised CAFE III Draft Norms For Public Consultation
By Arjun Nair
Published July 18, 2026

The Ministry of Power has issued a revised draft of the Corporate Average Fuel Economy Phase III (CAFE III) standards for passenger vehicles, proposed to take effect from April 1, 2027.
The updated draft adopts a more balanced stance compared to the earlier proposal, easing the overall fuel efficiency targets. Public feedback on the draft has been invited until August 6, 2026.
Updated CAFE III Norms Explained
Manufacturers will need to provide fuel efficiency data based on both the Modified Indian Driving Cycle (MIDC) and the Worldwide Harmonised Light Vehicles Test Procedure (WLTP).
A conversion factor between the two test cycles will be notified separately by the government.
Also Read – Top 10 Petrol Cars With Best Mileage You Can Buy
Phased Fuel Economy Targets Through FY2032
The proposal outlines progressively stricter fuel consumption targets over a five-year period. The proposed fleet-average target is 3.996 litres per 100 km (94.76 g CO₂/km) for FY2028, tightening to 3.3273 litres per 100 km (78.90 g CO₂/km) by FY2032.
These targets are less stringent than those proposed in the earlier draft. Compliance will be assessed over two blocks, with the first spanning three years and the second spanning two.
Compliance Credits And Penalty Structure
Manufacturers that exceed their prescribed fuel efficiency targets will earn compliance credits, while those falling short will accumulate debits. Credits may be traded with other manufacturers or purchased from the Bureau of Energy Efficiency (BEE).
The draft proposes a buyout price of Rs 2,500 per g CO₂/km for FY2028, rising by Rs 500 annually to Rs 4,500 per g CO₂/km by FY2032.
Unused credits will lapse at the end of a compliance block. Manufacturers with annual sales below 1,000 passenger vehicles remain exempt.
Also Read – Check Out These Upcoming Hybrid Cars In India
Incentives For EVs, Hybrids, And Fuel-Saving Technologies
The draft offers super credits (volume derogation) for battery electric vehicles (BEVs), range-extended electric vehicles (REEVs), plug-in hybrid electric vehicles (PHEVs), strong hybrid electric vehicles (SHEVs), and flex-fuel vehicles (FFVs).
Separately, Carbon Neutrality Factors (CNFs) are introduced for the first time, recognising the carbon-neutrality of ethanol, compressed biogas (CBG), and biofuels by permitting reductions in declared tailpipe CO₂ emissions.
The draft also finalises the technical criteria for claiming fuel-efficiency benefits from technologies such as start-stop systems, regenerative braking, tyre-pressure monitoring systems (TPMS), electric water pumps, high-efficiency air-conditioning systems, and advanced glazing, with an overall cap of 9 g CO₂/km across all technologies.
Also Read – Every Upcoming EV in 2026
Table of Contents
- Updated CAFE III Norms Explained
- Phased Fuel Economy Targets Through FY2032
- Compliance Credits And Penalty Structure
- Incentives For EVs, Hybrids, And Fuel-Saving Technologies
Join the Conversation
Trending

Every CNG Automatic Car Available in the Market
These options offer the convenience of an automatic without compromising on mileage.
Salil Kumar
September 10, 2026

Maruti Suzuki Offering Up to Rs. 1.35 Lakh Benefits in September 2026
Maruti Suzuki's September 2026 Arena offers cover seven models, with the Victoris strong hybrid getting the highest benefits at Rs. 1.35 lakh. Here is the full breakdown, including fuel-type differences on the Wagon R, Alto K10, Swift, and Eeco.
Anmol Kumar
September 10, 2026

2026 Maruti Suzuki Baleno Facelift Every Variant Explained
Every Baleno facelift variant explained, from the stripped Sigma to the ADAS-equipped Alpha (O). Find out exactly which trim suits your needs, what each one gives up, and where the real value sits in the lineup.
Anmol Kumar
September 10, 2026

Maruti Suzuki Baleno Facelift Launched at Rs 6.10 Lakh with a New Engine, Level 2 ADAS and Ventilated Seats
Maruti Suzuki has launched the Baleno facelift at Rs 6.10 lakh as an introductory festive price. The update brings a new Z-Series engine, Level 2 ADAS, ventilated front seats, and an active-cooled wireless charger, all new to this hatchback.
Anmol Kumar
September 10, 2026

Toyota Glanza Facelift Debuts on October 14, Expected With New 3-Cylinder Engine and Level 2 ADAS
The Toyota Glanza facelift will make its India debut on October 14, arriving about a month after the Baleno facelift it is based on. Here is everything expected to change, and what is not changing.
Arjun Nair
September 9, 2026
Featured
Citroen C3 Review: Who Should Consider This Car?
A few days ago, I took the Citroen C3X out for a spin in the city and on the highways. I travelled long distances and checked its fuel efficiency, features, comfort, and other factors. Today, I’ll briefly share my overall experience with the C3X and will tell you whether you should consider it or not and which is the most value-for-money variant of the lot.
Vatsal Agrawal
May 19, 2026

Tesla Finally In India Officially. Why Now And What Does It Mean For EVs?
The much-anticipated 2025 Tesla Model Y has officially arrived in India, marking a pivotal moment for the nation's burgeoning electric vehicle market. Launched on July 15, 2025, the Model Y Juniper facelift offers cutting-edge technology, impressive range, and signature Tesla performance. Positioned as a premium electric SUV, its entry will intensify competition and reshape consumer expectations for EVs across the subcontinent.
Charan Narain
July 17, 2025

Here Are 10 Things The Harrier.EV Offers That The Mahindra XEV 9E Doesn't
The Harrier.EV is an incredible new offer from Tata. Its most popular competitor would be the Mahindra XEV 9E, priced similarly. With these two incredible offerings from home grown brands available, here is a list of everything the Harrier.EV offers that the XEV 9E doesn't.
Charan Narain
June 13, 2025

Write a comment
Comments
No comments yet. Be the first to comment!