India's passenger vehicle industry is heading towards a new fuel-efficiency regime, with the government's Corporate Average Fuel Economy (CAFE-III) norms set to take effect from April 1, 2027. The rules will remain in force until March 31, 2032 and will cover M1 category passenger vehicles manufactured or imported for sale in India.
The new framework puts greater emphasis on fleet-wide fuel consumption and gives automakers several ways to meet their targets, including credit trading, additional benefits for electric and hybrid vehicles, carbon-neutrality factors for certain fuels and incentives for fuel-saving technologies.
