Govt May Link Fuel Norms to Car Size under CAFE III Norms from 2027— What You Need to Know

New CAFE Norms

The government is considering size-based CAFE (Corporate Average Fuel Efficiency) norms in its third phase to boost vehicle fuel economy and cut carbon emissions. The updated rules are expected to roll out from April 1, 2027.

Stakeholder Consultations

The Bureau of Energy Efficiency (BBE) and Heavy Industries Ministry are collecting industry feedback, with consultative meetings planned as part of the rule-making process.

Technical Details Pending

There’s still no clarity on how vehicle size will be defined—whether by engine capacity, length, or weight. It's also unclear if incentives will be offered to help small-car makers comply with new fuel-efficiency norms.

Emission Limit Clash

Under Worldwide Harmonized Light Vehicles Test Procedure (WLTP) testing, the Bureau of Energy Efficiency (BEE) proposed a 91.7 g/km CO₂ ceiling, while manufacturers suggested 92.9 g/km under the Indian Modified Indian Driving Cycle (MIDC); the current CAFE II norms allow 113.1 g/km.

EV Adoption Influences

Automakers argue that the slow adoption of electric vehicles could make upcoming CAFE III fuel-efficiency and CO₂ standards hard to meet. They’re pushing for a “technology-agnostic” framework that also rewards hybrids and other clean technologies.

by freepik

SUVs in Spotlight

SUVs now make up over 55% of 2025’s car sales and are generally less fuel-efficient. The proposed size-based fuel norms aim to improve overall fleet efficiency by targeting such high-emission vehicle segments.

SUV Cost Impact

Buyers of larger cars could face higher costs if manufacturers pass on the expense of meeting tighter efficiency targets—especially in SUV segments.

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