CAFE-III Norms Set Clear Path for Cleaner Mobility, Say Industry Players

Automobile and biofuel industry representatives on Wednesday welcomed the government’s notification of the Corporate Average Fuel Economy (CAFE)-III norms for passenger vehicles, saying the framework provides regulatory certainty and a clear roadmap for cleaner and more sustainable mobility.

Society of Indian Automobile Manufacturers (SIAM) President Shenu Agarwal said the industry welcomed the new regulation, describing it as a structured framework with ambitious annual targets and a market-based compliance mechanism.

According to Agarwal, the norms will help reduce fuel consumption across new passenger vehicle fleets while allowing automakers to adopt different technology pathways and provide consumers with a wider range of choices.

He said the clarity provided by the framework would enable manufacturers to plan investments more effectively and accelerate innovation in fuel-efficient and cleaner vehicle technologies.

Agarwal also welcomed the government’s consultative approach in framing the regulation, saying it takes into account different clean-technology options while providing greater long-term predictability for the automobile industry.

All India Distillers’ Association (AIDA) President Vijendra Singh also welcomed the notification, saying it was a positive development for both the automobile and biofuel sectors.

He said the recognition of ethanol and flex-fuel vehicles through carbon-neutrality benefits and super-credit provisions would provide greater policy visibility for biofuels and clearer planning signals for automakers.

Singh said the framework could create opportunities for further expansion of India’s ethanol ecosystem and strengthen the connection between biofuels and the country’s clean-mobility objectives.

He added that the focus should now be on expanding the availability of flex-fuel vehicles, strengthening fuel infrastructure and increasing consumer awareness.

Deloitte India Partner and Auto Sector Leader Rajat Mahajan said the norms provide a clear direction for the automobile industry over the next five years and reinforce the transport sector’s role in reducing pollution.

He said automakers could benefit from increasing the adoption of electric, hybrid, alternative-fuel and fuel-saving technologies, although meeting the requirements would involve significant investments and careful product planning.

Mahajan added that the framework could accelerate the transition towards new-energy vehicles, while credit trading would provide flexibility to manufacturers that fall short of the prescribed targets.

The newly notified CAFE-III norms will come into effect from April 1, 2027, and remain applicable until March 31, 2032.

The framework mandates progressively tighter fuel-efficiency targets for passenger vehicles over the five-year period while providing manufacturers with multiple compliance pathways.