The Power Ministry has notified the CAFE-III fuel economy norms, which will apply to passenger vehicles sold between April 1, 2027 and March 31, 2032. The notification was issued on September 30.

The norms set fleet-average carbon dioxide targets that tighten from 113.1 grams per kilometre in 2027-28 to 91.7 grams per kilometre by 2031-32. In fuel terms, that means average consumption falling from 3.996 to 3.3273 litres per 100 kilometres.

Unlike earlier rounds, CAFE-III offers no special concession for small cars. Maruti Suzuki had sought relief for entry-level models, arguing that the targets would make affordable cars costlier. The government did not agree.

The framework includes super-credits that count cleaner vehicles multiple times. Battery electric and range-extended electric vehicles count three times, plug-in and strong hybrids 2.5 times, and flex-fuel vehicles 1.1 times. Carmakers that beat their targets can sell credits to those that miss them through a trading mechanism run by the Bureau of Energy Efficiency.

Industry body SIAM welcomed the notification, saying the five-year roadmap gives manufacturers planning certainty. The norms are expected to push hybrids and electrics deeper into mainstream lineups.