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New Delhi: The Ministry of Power on Thursday circulated the Draft Corporate Average Fuel Economy 2027 Norms (CAFE-III) for stakeholder consultation. The norms are proposed to apply to M1 category passenger vehicles manufactured or imported for sale in India during 2027-28 to 2031-32.
For the first time, Carbon Neutrality Factors (CNFs) are proposed to recognise the carbon-neutrality of ethanol, biofuel, and Compressed Bio-Gas (CBG) by permitting specified reductions in declared tailpipe carbon dioxide emissions before compliance assessment.
For present levels of ethanol, an 8% CNF shall be considered, while for CBG and biofuel, the reduction shall be based on the prevailing actual blending level.
The last date for receipt of suggestions and feedback is August 6, 2026. The draft norms shall also be uploaded to the websites of the Ministry of Power and the Bureau of Energy Efficiency shortly.
The existing CAFE-II norms are likely to come to an end on 31st March 2027. The proposed norms for CAFE-III shall come into force on 1st April 2027 and shall remain in force for a period of five years. Compliance shall be assessed over two compliance blocks, comprising an initial block of three years, followed by a second block of two years.
The fuel consumption targets are proposed to be progressively tightened, from 3.996 litres/100 km (94.76 gCO₂/km) in 2027-28 to 3.3273 litres/100 km (78.90 gCO₂/km) in 2031-32.
The phased tightening of the targets will provide OEMs with a clear and predictable regulatory pathway, enabling them to progressively develop and deploy more fuel-efficient vehicle models.
Manufacturers shall be eligible to claim up to 9 gCO₂/km of compliance benefit for approved fuel-saving technologies, subject to a maximum benefit of 1 gCO₂/km per technology.
Volume derogation (super credits) shall be available for Battery Electric Vehicles (BEVs), Range-Extended Electric Vehicles (REEVs), Plug-in Hybrid Electric Vehicles (PHEVs), Strong Hybrid Electric Vehicles (SHEVs), and Flex-Fuel Vehicles (FFVs) while calculating fleet average fuel consumption, thereby encouraging the adoption of cleaner vehicle technologies.
A credit and debit mechanism is proposed, similar to the recently circulated draft amendment to CAFE -II norms. Manufacturers achieving performance better than their prescribed targets shall earn compliance credits, which may be carried forward within the prescribed compliance blocks.
As per the ministry, manufacturers falling short of the prescribed targets may meet their obligations through carry-forward provisions, voluntary pooling arrangements with other manufacturers, or by purchasing compliance credits from the BEE.
Compliance credits shall be denominated in units of 1 gCO₂/km. The initial buy-out price of credits from BEE is proposed to be Rs 2,500 per credit, with an annual escalation of Rs 500 per credit. Credits unutilized at the end of the compliance block shall stand lapsed.
OEMs would be liable to a penalty under the provisions of the EC Act for non-compliance of these norms. Manufacturers with annual sales of less than 1,000 passenger vehicles shall continue to be exempt from the proposed norms, it added. (Agencies)
