Draft CAFE 3 norms ease emission targets, boost small car advantage

A relaxation in emission targets compared to the earlier September draft has been proposed by the all-new Corporate Average Fuel Consumption (CAFC) Stage 3 norms. The new draft suggests that smaller cars are set to benefit more from a revised framework. While the formula used to calculate fuel efficiency targets remains unchanged, the constants that determine the change have been revised. These new changes result in a flatter curve, allowing higher permissible emissions for a given vehicle weight.

The updated draft reduces the multiplier and increases both the reference vehicle weight and baseline fuel consumption levels. Together, these changes shift the efficiency curve upward, effectively easing the compliance requirements for manufacturers. The curve refers to the weighted average target line that determines how much carbon dioxide a manufacturer’s fleet is allowed to emit based on vehicle weight.

More from Auto

In the revised formula, the multiplier has been reduced from 0.002 to 0.00158 for the first year, while the reference weight has increased from 1,170 kg to 1,229 kg. The baseline consumption figure has also been raised from 3.7264 litres per 100 km to 3.9960 litres per 100 km for 2027–28.

Small Cars See Greater Benefit

As CAFC targets are linked to vehicle mass, the revised curve does not affect all segments equally. Smaller cars, which sit further below the reference weight, see a larger easing in emission limits. Larger vehicles and SUVs also benefit, but to a lesser extent.

The draft that was earlier proposed in September had an additional 3 g CO₂/km relaxation specifically for sub-4-metre petrol cars, with a cap of 9 g/km per model year. This was viewed as a cushion to the small car segment, which remains sensitive to cost increases.

However, this explicit benefit has now been removed. Instead, the relaxation has been incorporated into the revised curve, resulting in a more uniform easing across segments rather than a targeted concession.

Other Changes

The newly proposed framework includes super credits for electric and hybrid vehicles, allowing them to be counted as more than one vehicle when calculating fleet emissions. Under the new 2026 draft, each battery electric vehicle continues to count as three vehicles, while multipliers for strong hybrids and flex-fuel vehicles have been reduced to 1.6 and 1.1 from 2.0 and 1.5, respectively, in the September 2025 draft.

Implementation Timeline and Scope

CAFC norms are part of India’s broader effort to reduce fuel consumption and emissions from road transport. Issued under the Energy Conservation Act, they apply to M1 category passenger vehicles, which include passenger cars designed to seat up to nine persons and weigh a maximum of 3,500 kg.

The proposed Stage 3 norms are expected to come into effect from April 1, 2027.