Corporate Average Fuel Efficiency (CAFE)
India has introduced draft regulations for the third version of Corporate Average Fuel Efficiency (CAFE) norms. These proposed rules aim to ease emissions targets for small cars and promote electric vehicle sales. The Bureau of Energy Efficiency (BEE) has opened the draft for public consultation. The norms apply to M1 category vehicles, which include passenger cars with up to nine seats and a maximum weight of 3,500 kg. Automakers must meet these targets or face penalties.
New Efficiency Targets under CAFE 3
The CAFE 3 formula calculates fuel efficiency in petrol-equivalent litres per 100 km using fleet weight and a changing constant ‘c’. The constant decreases annually from 3.7264 in FY28 to 3.0139 in FY32, making the norms stricter over time. Lighter fleets have lower fuel consumption targets, encouraging manufacturers to produce smaller, lighter vehicles.
Relaxation for Small Cars
Small cars weighing up to 909 kg, with engines no larger than 1200 cc and length under 4000 mm, will receive additional emission relaxations. These cars can claim a reduction of 3 g CO₂/km, capped at 9 g CO₂/km. This move aims to revive the small car segment, which has seen a 71% sales decline over six years. The government has also reduced GST on small cars from 28% to 18% to boost affordability.
Incentives for Electric and Hybrid Vehicles
CAFE 3 proposes super credits for electric and hybrid vehicles. Electric vehicles count triple towards meeting fleet targets. Range-extender hybrids also get triple credit. Plug-in hybrids count 2.5 times and strong hybrids twice. Flex-fuel ethanol cars receive a 1.5 multiplier. Additionally, a carbon neutrality factor (CNF) offers further emission target relaxations based on fuel type, such as 8% for petrol with ethanol blends and 22.3% for flex-fuel and strong hybrids.
Emissions Pooling for Manufacturers
The draft introduces emissions pooling, allowing up to three manufacturers to combine their fleets to meet average fuel consumption targets. Pools are treated as a single manufacturer for compliance. This encourages strategic alliances, cost-sharing, and easier target achievement. The pool manager holds legal responsibility for penalties under the Energy Conservation Act, 2001.
Background of India’s CAFE Norms
India’s CAFE norms began in 2017 to regulate fuel consumption and carbon emissions for passenger vehicles under 3,500 kg. They cover petrol, diesel, LPG, CNG, hybrids, and electric vehicles. Norms were tightened in 2022-23, setting a fuel consumption limit of 4.78 litres/100 km and CO₂ emissions cap of 113 g/km. The framework aims to reduce oil dependence and pollution while encouraging cleaner vehicle technologies.
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