CAFE 3.0 Norms: New fuel efficiency rules may be postponed due to lobbying by car companies, frequent meetings in PMO

Amid lobbying by car companies, the government may postpone the implementation of Corporate Average Fuel Efficiency (CAFE) norms beyond April 2027. An MOU on CAFE 3.0 rules is ready, which is designed to control the average fuel efficiency and carbon emissions of passenger vehicles. These rules are expected to have a big impact on the auto industry, so companies are actively putting pressure on the government.

The PMO has held two meetings on this issue in the last three weeks and discussions will continue further. Its objective is to prepare a formula that is acceptable to the industry and at the same time improves fuel efficiency and emissions. In the meeting held in the PMO on Monday, the Power Ministry gave a detailed presentation on the proposed CAFE 3.0 norms. The ministry also stressed the ‘urgent’ need to notify these rules soon.

Expect more from Tata Motors

According to a TOI report, for the first time in this meeting, a detailed assessment of the possible performance of the country’s top five car companies was presented. Based on the proposed framework (which will be released for public comment soon), only Tata Motors will be able to achieve the target between 2027-28 and 2031-32. At the same time, big players like Maruti Suzuki and Hyundai Motors may miss the target. It is clear that the new rules will be challenging for many companies, especially those that mainly depend on petrol and small cars.

CAFE norms already in place

CAFE norms are already applicable in India. CAFE 2 is currently underway, but CAFE 3.0 will be more stringent. This will focus on further reducing CO2 emissions, which will force companies to increase cars with electric, hybrid and more fuel-efficient engines. The auto industry is already divided over discounts, weight-based slopes and other parameters for small cars. Some companies (like Tata and Mahindra) are supporting stricter rules, while companies focusing on small cars like Maruti are demanding relief.

future plan

The government aims to protect environment, energy security and reduce dependence on imported oil. But the industry argues that sudden strict rules will increase car prices, which will be especially difficult for middle class buyers. Over the past few months, the draft CAFE 3.0 has undergone several changes, such as removing the proposed exemption for small cars. Now the possibility of delay in the deadline has increased due to lobbying.

Who benefits from the delay?

If the rules are postponed, companies will get additional time to prepare, but environmental experts say the delay will hurt emissions reduction goals. At present, the final decision is yet to be taken at the PMO level. A clear picture will emerge only after more meetings are held.