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Context:
The third edition of Corporate Average Fuel Efficiency (CAFE-III) norms, set to apply between FY28 and FY32, has reignited debate in the Indian automobile industry. While intended to cut fleet-wide CO₂ emissions and improve fuel efficiency, the draft norms raise questions beyond affordability, touching on urban pollution, public health, safety standards, and market structure.
CAFE Norms
CAFE-III refers to the third phase of Corporate Average Fuel Efficiency norms for automobiles in India. These norms set fleet-wide fuel efficiency and CO₂ emission standards that vehicle manufacturers must meet. Essentially, it requires manufacturers to ensure that the average fuel efficiency of all vehicles they sell meets a specified target.
Key Features
- CAFE norms in India have been in force since FY18, targeting fleet-wide carbon dioxide emission reduction for all passenger vehicle manufacturers.
- CAFE-III introduces tighter targets, requiring higher investments in better-designed components.
- Electric vehicles (EVs) will count as super credits, incentivising manufacturers to transition to zero- or low-emission vehicles.
- Scope: Applies to all manufacturers producing vehicles for the Indian market.
