New Corporate Average Fuel Economy Norms Notified

India’s Ministry of Power notified the Corporate Average Fuel Economy-3 norms on 30 September 2026. The norms will apply from April 2027 to March 2032 and set fuel-consumption and carbon-dioxide reduction requirements for vehicle manufacturers.

Corporate Average Fuel Economy in India

Corporate Average Fuel Economy, or CAFE, is a regulatory framework for measuring the average fuel efficiency of vehicles sold by a manufacturer. In India, the norms are used to regulate fleet-level fuel consumption and emissions for passenger vehicles.

The CAFE-3 norms do not provide a separate concession for small cars. The revised methodology fixes the reference vehicle weight at 1,229 kg and uses a flatter weight adjustment for compliance calculations.

Fuel-Consumption Targets and Compliance Method

The new norms aim for a 16.7% improvement in fuel consumption. The benchmark is set to move from 3.996 litres per 100 km in 2027–28 to 3.3273 litres per 100 km in 2031–32.

The revised weight-based formula gives softer targets for lighter vehicles and stricter targets for heavier vehicles. This structure links compliance to the average mass of the manufacturer’s fleet.

Super-Credits and Clean Vehicle Categories

The CAFE-3 rules provide super-credits for cleaner vehicles. Battery electric vehicles are counted as three vehicles for compliance purposes, and additional factors apply to plug-in hybrids, flex-fuel strong hybrids, strong hybrids, and flex-fuel vehicles.

Super-credit systems are used in vehicle-emission regulation to give additional compliance value to low-emission technologies. Such mechanisms are common in fleet-based standards that assess manufacturers rather than individual models.

Important Facts for Exams

• CAFE stands for Corporate Average Fuel Economy and is a fleet-level vehicle efficiency standard.
• The CAFE-3 norms in India will operate from April 2027 to March 2032.
• The reference vehicle weight under the revised methodology is 1,229 kg.
• Battery electric vehicles receive a three-vehicle credit under the CAFE-3 compliance system.

International Fuel-Efficiency Standards

The United States Department of Transportation and the National Highway Traffic Safety Administration released revised fuel-economy standards for Model Year 2022-2031 vehicles. The updated U.S. standards project a fleetwide average of about 34.9 miles per gallon for passenger cars and light trucks in the 2031 model year.

The European Union’s new CO₂ targets for passenger cars and light commercial vehicles are scheduled to enter into force on 1 January 2025. The EU framework aims for a 15% CO₂ reduction for 2025-2029 compared with 2021 levels and a 100% reduction by 2035.