New Delhi: The Centre has proposed a revised and more flexible framework for Corporate Average Fuel Efficiency (CAFE) norms for 2027-2032, offering relief to the domestic automobile industry by easing compliance requirements, according to a report.
The updated draft, prepared by the Ministry of Power in consultation with the Bureau of Energy Efficiency (BEE), shifts away from a rigid target-based system to a phased tightening approach.
What is CAFE 2027 and why it matters
The proposed CAFE 2027 norms mark the third phase of India's fleet-level fuel efficiency roadmap, aimed at aligning the auto sector with national climate and energy goals.
The new rules are set to come into effect from April 1, 2027, and will be gradually tightened through FY32.
Softer emission targets, flatter compliance curve
Under the revised draft, the government has introduced a flatter compliance curve, reducing the earlier advantage given to heavier vehicles.
The emission curve has been recalibrated with a revised slope formula - set at 0.00158 in FY28 and easing to 0.00131 by FY32 - allowing slightly higher fuel consumption than previously proposed.
This marks a significant softening compared to the September 2025 draft, offering greater operational flexibility to automakers.
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Incentives for EVs and hybrid vehicles
The draft includes super credits for electric vehicles (EVs) and hybrid models, allowing them to be counted as multiple units in fleet emission calculations.
Plug-in hybrids and flex-fuel hybrids are expected to receive higher multipliers, making them more attractive for manufacturers aiming to meet compliance targets.
Credit trading and compliance flexibility
To further ease compliance, the government has proposed allowing credit trading between manufacturers, enabling carmakers to offset deficits and optimise fleet emissions more efficiently.
However, penalties for non-compliance remain stringent and could run into hundreds of crores of rupees for large automakers, making EV and hybrid credits a key financial lever.
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Exemptions for small manufacturers
The draft also exempts niche manufacturers producing fewer than 1,000 units annually from compliance requirements, providing relief to small-scale and specialised players.
Impact on auto sector and emissions targets
The revised CAFE 2027 norms are expected to balance environmental goals with industry realities, especially amid rising input costs and evolving demand for cleaner mobility solutions.
IANS