In a move to give big relief to the home auto industry, the Government of India is to ease the rules of Corporate Average Fuel Efficiency (CAFE) 2027-32, according to NDTV Profit report.
The revised draft by the Energy Ministry, prepared with the consultation of the Bureau of Energy Efficiency (BEE), the government has approached tightening in a phased manner rather than with rigorous targets.
The draft also proposes reductions in the scope of compliance that will diminish the benefits previously provided to heavy vehicles.
Known as CAFE 2027, it marks the third phase of the fleet-level fuel economy roadmap. The plan aims to align the automobile sector with India’s comprehensive climate and energy goals.
Reports suggest the rules under CAFE-2027 will roll out from 1 April 2027. Implementation will proceed progressively in a phased manner by 2032.
The new draft of CAFE-2027 is more liberal in terms of rules in comparison to the draft unveiled in September 2025, NDTV Profit reported.
The new framework realigns the emission curve with a slope of 0.00158 in FY28 and 0.00131 by FY32. This reduction can increase fuel consumption compared to what earlier proposals suggested.
The draft also includes a provision for super credit for electric and hybrid vehicles. This will allow them to count as multiple vehicles when calculating fleet-level emissions.
As per the proposed infrastructure, expectations are high for the high coefficient for plug-in hybrid and flex-fuel hybrid vehicles. Also, credit trading has been permitted among the manufacturers. This will provide car manufacturers with additional flexibility in managing compliance obligations.
The report warns of massive fines for manufacturers in failing to comply. This makes a significant financial source for the EV and Hybrid credit system industry
The rules exempt manufacturers producing fewer than 1,000 units from compliance requirements. This will provide relief to small-scale producers.
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