India's auto industry is set for a relief from the government. The Ministry of Power, in consultation with the Bureau of Energy Efficiency (BEE), has rolled out a revised draft of Corporate Average Fuel Efficiency (CAFE) norms for the 2027–2032 cycle, according to the draft accessed by NDTV Profit.
The move aims to offer the industry a more measured compliance pathway than what was proposed earlier while maintaining the long-term sustainability goals.
Known as CAFE 2027, the draft represents the third stage of India's fleet-level fuel economy roadmap, designed to align the auto sector with broader climate and energy goals.
The revised framework marks a notable softening from the September 2025 draft. The emission curve has been recalibrated with a new slope formula — set at 0.00158 in FY28 and easing gradually to 0.00131 by FY32 — allowing slightly higher fuel consumption than previously proposed.
The government has rejected a static target approach in favour of phased tightening, with a flatter curve that also reduces the compliance advantage heavier vehicles previously enjoyed.
The draft framework includes super credits for electric and hybrid vehicles, allowing them to count as multiple vehicles when calculating fleet emissions, with plug-in hybrids and flex-fuel hybrids receiving higher multipliers.
Credit trading between firms is also permitted under the new proposal, giving carmakers additional flexibility to manage compliance.
Penalties for non-compliance could run into hundreds of crores of rupees for large manufacturers, making the EV and hybrid credit mechanism a significant financial lever.
Small volume manufacturers have been exempted from compliance, offering relief to niche players producing fewer than 1,000 units. The norms are set to kick in from April 1, 2027, and tighten progressively through FY32.
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