Amitabh Kant calls new CAFE-3 norms a missed opportunity for India

Former CEO of NITI Aayog Amitabh Kant sharply criticized the Corporate Average Fuel Economy (CAFE-3) norms, calling them an 'enormous missed opportunity,' which he believes are 'at best status-quoist and at worst regressive.'

Speaking on social media platform X, Kant stated that the new standards represented a chance for India to achieve a technological leap similar to that seen with UPI and smartphones. However, according to him, instead, an enormous missed opportunity occurred. He emphasized that the new CAFE norms are either regressive or merely maintain the status quo because they lack vision and a clear future plan, and regulation follows the industry rather than guiding it. Kant noted that electric vehicles should be the ultimate goal, not just one of many options.

The Ministry of Energy announced the introduction of CAFE-3 norms on Tuesday evening. These norms establish new requirements for fuel efficiency and carbon dioxide (CO2) emissions for passenger cars from April 1, 2027, to March 31, 2032.

India cannot secure its mobility future by protecting its past: Kant

Kant argued that India will not succeed in the mobility sector by maintaining old approaches, citing the country's dependence on oil imports. He reminded that the country imports nearly 90% of its oil and is actively developing battery and electric vehicle manufacturing capacities. In his view, fuel efficiency rules should incentivize the industry to move towards this future, rather than allowing it to postpone changes.

He also commented on the target for electric vehicle adoption under the new norms, noting that they aim for 11 percent of electric vehicles by 2032, whereas in the current fiscal year, the share of EV sales is already approaching 8 percent. Criticizing the Bureau of Energy Efficiency (BEE), Kant stated: 'How can it sell credits? The regulator cannot be a market player in what it regulates. This was a moment to jump up. We missed it due to a regressive regulator.'

This is not the first time Kant has criticized CAFE norms. Before the official notification of CAFE-3 standards, he repeatedly spoke out against projects released by the Bureau of Energy Efficiency.

Exemption for small cars removed

The rules apply to M1 category vehicles, which cover passenger cars such as hatchbacks, sedans, SUVs, and MPVs seating up to eight passengers besides the driver. One of the most significant changes is the removal of a separate CAFE exemption for small gasoline cars weighing up to 909 kg. Previously, such an exemption was requested by Maruti Suzuki India, while Tata Motors, JSW MG Motor, and other automakers opposed it. The September 2025 proposal included a reduction of the CO2 emission rate by 3 g/km for gasoline cars weighing up to 909 kg, but the final rules excluded this separate benefit.

Vehicle weight will influence CAFE targets

CAFE targets are calculated for each manufacturer based on the weighted average mass of their new vehicles. In the final rules, the reference weight is set at 1229 kg. The annual weight multiplier will decrease from 0.00158 in fiscal year 28 to 0.00131 in fiscal year 32. For automakers, this may affect the choice of vehicle weight, engine efficiency, powertrains, and the range of models sold.

Electric vehicles retain compliance advantage

Another important feature of CAFE-3 is the supercredit mechanism, which grants manufacturers additional compliance value for selling more environmentally friendly vehicles. According to the final rules, one Battery Electric Vehicle (BEV) will count as three vehicles when calculating the manufacturer's fleet metrics. The same 3x coefficient applies to Range Extended Electric Vehicles (REEVs). The higher this coefficient, the easier it is for the automaker to meet the emission target. For plug-in hybrids and strong hybrids running on flexible fuel, the coefficient is 2.5x. Strong hybrids receive a coefficient of 1.6x, and flexible fuel vehicles receive 1.1x. Any fuel mixture containing at least 85 percent ethanol is called flexible fuel. The final structure differs significantly from the initial proposal. The June 2024 proposal offered a 4x coefficient for BEV, 2x for PHEV, 1.2x for strong hybrids, and 5x for hydrogen fuel cells. Hydrogen fuel cells are not featured in the final supercredit table.

Credit and debit system introduced

CAFE-3 also introduces a credit and debit system. Manufacturers who perform better than the targets receive credits, while those who lag accumulate debits. These entries are maintained in a manufacturer-level ledger. Credits can be transferred within a compliance block. The first compliance block covers fiscal years 28–30, and the second covers fiscal years 31–32. Unsettled credits expire at the end of the respective block. Automakers can also trade credits with other manufacturers. A manufacturer with a deficit can purchase credits from the Bureau of Energy Efficiency. The price starts at 2500 rupees per g CO2/km in fiscal year 28 and increases to 4500 rupees in fiscal year 32. Credit trading and purchase will be permitted annually from October 1 to October 31.

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www.aajtak.inSeptember 30, 09:25

New CAFE-3 norms effective April 1st: Fuel consumption calculation in the automotive industry will change

The country's automotive market is preparing for significant changes. Previously, the main indicator of success for companies was increasing sales volume, but from 2027, the focus will shift to the percentage ratio of electric and hybrid vehicles among all sold cars, as well as their fuel consumption and carbon dioxide (CO2) emissions levels.

The government has made an important decision aimed at reducing air pollution from vehicles and stimulating manufacturers to create more economical vehicles. The central government has issued a notification on the introduction of CAFE-3 norms (Corporate Average Fuel Economy, Phase 3) for passenger cars. These new rules will come into effect on April 1, 2027, and remain valid until March 31, 2032.

The main objective is now for the automaker to keep the average rating of its entire fleet within the established standards of cleanliness and economy. In the new CAFE-3 norms, introduced in 2027, the most significant point is that one battery electric vehicle will be counted as three vehicles in the company's total fleet. This means that electric vehicles will not only reduce road emissions but also simplify calculations for the companies themselves.

Furthermore, hybrid, flex-fuel, and other energy-efficient technologies will benefit from these changes.

CAFE-3 is a government-set standard that monitors the average fuel consumption and CO2 emissions of the entire company fleet. Its goal is to encourage manufacturers to create vehicles with lower pollution levels and greater fuel efficiency. The new CAFE-3 norms are in the implementation phase.

These rules will apply to M1 category motor vehicles in accordance with the Central Motor Vehicle Rules of 1989. Under these regulations, companies are obliged to keep the average fuel consumption of their entire fleet within limits set by the government each financial year. The Ministry of Transport and Road Transport (MoRTH) will implement these rules jointly with relevant ministries and departments, including testing, calculations, reporting, production, carbon neutrality factor, and deviation factor.

Under CAFE-3, the annual fuel consumption standard for companies will be determined based on the Modified Indian Driving Cycle (MIDC). The formula for this calculation is set as 'a x (W - b) + c'. Here, W represents the average curb weight of new vehicles produced or imported by the company for sale in India, and b has a fixed value of 1229 kilograms.

The government has set the value of 'a' to 0.00158 and 'c' to 3.9960 liters per 100 kilometers for the 2027-28 period. After this, the limit will gradually decrease. By 2031-32, 'a' will decrease to 0.00131, and 'c' to 3.3273 liters per 100 kilometers. This requires companies to continuously improve the average fuel consumption of their fleet, meaning producing more fuel-efficient vehicles.

A complete schedule of 'a' and 'c' values for the next five years has been defined for the new CAFE-3 norms. In 2027-28, 'a' will be 0.00158, and 'c' will be 3.9960. In 2028-29, they will be 0.00152 and 3.8600, respectively. Further, in the 2029-30 fiscal year, 'a' will become 0.00148, and 'c' will be 3.7585. In 2030-31, the values will reach 0.00139 and 3.5313. And in 2031-32, they are set at 0.00131 and 3.3273.

Assuming the average curb weight of the fleet is 1229 kg, the fuel consumption standard for 2027-28 will be 3.996 liters per 100 km (equivalent to approximately 25.03 km/liter). This standard will decrease to 3.3273 liters per 100 km by 2031-32. The company must ensure that the actual average fuel consumption in each financial year is equal to or below this set standard.

Under CAFE-3, the actual fuel consumption of a model will be calculated based on the CO2 emissions registered during the type approval process. A coefficient of 0.04217 is used for gasoline cars, 0.03776 for diesel, 0.06150 for LPG, and 0.03647 for CNG.

For electric vehicles, consumption is measured in kWh per 100 kilometers. Then, the consumption of various fuels and electric vehicles is converted to gasoline equivalent. According to the notification, the conversion coefficients are set as follows: 1.1168 for diesel, 0.6857 for LPG, 1.1563 for CNG, and 0.1028 for electric vehicles.

A key advantage of CAFE-3 is the so-called 'super credit' for electric vehicles. For battery electric vehicles and extended-range electric vehicles, a volume deviation factor of 3.0 is applied. This means that one electric car will be counted as three vehicles when calculating the company's sales. For plug-in hybrids and strongly hybrid vehicles running on ethanol gas, this factor is 2.5. For strong hybrid electric vehicles, it is 1.6, and for flex-fuel vehicles with ethanol, it is 1.1.