CAFE-III norms: India officials and automakers move towards consensus on draft fuel efficiency rules

Senior officials and auto industry representatives met on Thursday to settle the Corporate Average Fuel Efficiency CAFE-III norms. Sources said stakeholders broadly agreed with the latest draft proposals. The Bureau of Energy Efficiency, under the Ministry of Power, called the meeting. The discussion aimed to reduce remaining gaps before final rules are framed.

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Secretaries from the Ministry of Road Transport & HighwaysMoRTH, Ministry of Power MoP and Ministry of Heavy Industries MHI attended. Auto industry stakeholders, including original equipment manufacturers OEMs, also joined the talks. Sources said the session checked how car makers viewed the draft. Officials also signalled that the next stage would be finalising the framework.

CAFE-III norms timeline and government push

Sources said officials stressed the purpose of the fuel efficiency plan. "The motive behind drawing up the latest fuel efficiency norms is not to penalise them but to nudge them towards more fuel-efficient vehicles,\" a source close to the development said. Car makers were urged to prepare for rollout. Officials indicated implementation is unlikely to be delayed.

The CAFE-III norms are set to start from April 2027. The rules will remain in force until March 31, 2032, sources said. Officials asked firms to begin planning for compliance now. They also encouraged varied technology paths. Options included electric vehicles, hybrids, flex fuels and compressed bio-gas.

CAFE-III norms and automaker differences

The meeting followed differences among auto manufacturers over earlier drafts, sources said. Smaller car makers wanted extra flexibility under CAFE-III norms. They cited vehicle weight and affordability as key factors. Larger OEMs opposed separate standards for smaller models. They argued that different treatment could limit safety features.

Sources said the industry has largely accepted the newest draft rules. The meeting focused on gauging views and building consensus across segments. Officials and firms reviewed issues raised in past discussions. The goal was to narrow disagreements before the draft is given its final shape.

CAFE-III norms carbon credits and compliance design

The draft shifts from penalties to a compliance-led system using carbon credits. It allows firms that beat emission reduction targets to sell extra credits. Manufacturers with fewer credits may buy them through mutual agreement. The draft also lets OEMs offset any debit balance in their passbook by buying credits from the Bureau of Energy Efficiency.

With broad acceptance reported, the talks pointed towards a final CAFE-III framework. Sources said the government wants firms to move towards cleaner fleets. The draft offers credit trading and credit purchases as compliance tools. Officials also repeated that the April 2027 start date is expected to hold.

With inputs from PTI