CAFE Norms
Fleet-Average Emission Regulation
Corporate Average Fuel Efficiency (CAFE) norms regulate a vehicle manufacturer's entire sales-weighted fleet average fuel consumption/CO2 emissions, rather than any single model, allowing manufacturers to offset heavier, less efficient vehicles by selling more efficient ones.
- CAFE-II (2022-2027) set a fleet average corporate CO2 emission limit of 113 grams/km for passenger vehicles
- Draft CAFE-III norms, applicable 1 April 2027 to 31 March 2032 for M1 category vehicles (up to 8 seats besides the driver), propose tightening the fleet average target to roughly 91.7 g/km, with a longer-term glide path toward about 78.9 g/km by FY32
- Compliance is assessed in two blocks — an initial three-year block and a subsequent two-year block — with a compliance credit mechanism (credits priced from around Rs 2,500, rising annually); manufacturers selling fewer than 1,000 units annually are exempt
- Electric vehicles receive "super-credit" weighting, counted as three vehicles each for compliance calculation
- For the first time, CAFE-III proposes crediting ethanol and other biofuel-blended vehicles with a lower notional tailpipe CO2 value than their actual combustion emissions, recognizing the lower lifecycle carbon footprint of biofuel-blended fuel
● Tracked since April 24, 2026 · last seen August 31, 2026 · updates as the daily brief publishes
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