The Central Government has notified the new rules of Corporate Average Fuel Economy i.e. CAFE-3 for passenger vehicles. These rules will be applicable from 1 April 2027 to 31 March 2032. Under the new rules, car companies will have to keep the average fuel efficiency and carbon emissions of their entire passenger vehicle range within the prescribed limits. This will affect petrol, diesel as well as electric, hybrid and other alternative fuel vehicles.
The government has also changed the way it sets targets for light and heavy cars. At the same time, a system of super credit has been kept to promote clean technologies like electric and hybrid. The new rules may require auto companies to make changes in their product portfolio and technology. According to PTI report, the purpose of these rules is to reduce fuel consumption and promote the country’s energy security and sustainable transportation.
On which vehicles will CAFE-3 rules be applicable?
CAFE-3 rules will be applicable to passenger vehicles. This includes vehicles like hatchback, sedan, MPV and SUV, which have a seating capacity of maximum eight passengers apart from the driver. New passenger vehicles manufactured or imported for sale in India will come under the purview of these standards.
Special discount for light cars ends
The draft of CAFE-3 proposed a special concession for petrol cars weighing less than 909 kg. Its objective was not to put too much pressure on the prices of small and affordable cars. However, this exemption has not been included in the final rules. In the new rules, the target line has also been kept flatter than before. This will set relatively soft fuel efficiency targets for light cars and more stringent fuel efficiency targets for heavy vehicles.
Big change in reference weight
In the new CAFE rules, the reference weight has been increased from 1,082 kg to 1,229 kg. That means there has been an increase of about 13.6 percent. This change has been made keeping in mind the increasing average weight of vehicles in the Indian passenger vehicle market over the last few years.
Efficiency will have to be improved by 16.7% by 2031-32
The fuel consumption benchmark under CAFE-3 will become stricter every year. In 2027-28, it has been kept at 3.996 liters per 100 kilometers, which will reduce to 3.3273 liters per 100 kilometers in 2031-32. That means the target is about 16.7 percent improvement in a period of five years.
EV and hybrid will get super credit
In the new rules, companies have been given the facility of super credit for adopting alternative fuels and clean technology. Battery Electric Vehicles (BEV), Range-Extended EV, Plug-in Hybrid, Strong Hybrid and flex-fuel vehicles will benefit from this. The sale of these vehicles will provide additional help to companies in meeting their fleet average emission targets.
Companies will also be able to deposit and trade credits
Credit-debit system has also been implemented in CAFE-3. Companies that perform better than the target will be able to earn additional credits and use them further. At the same time, companies that do not meet the target will be able to compensate for it by using old credits, purchasing credits from other companies or through the Procurement Program run by the Bureau of Energy Efficiency.
New technology will get a boost
Technologies like solar-reflective paint, advanced glazing and high-efficiency air conditioning have also been promoted in the new framework for better fuel efficiency. According to the government, CAFE-3 is in line with increasing electrification, availability of alternative and renewable fuels and changes in automobile technology.
