The industry urged to prioritise all fuel types that contribute to decarbonisation | Photo Credit: BABU

In a significant development, the automobile industry has reached a consensus on the draft Corporate Average Fuel Efficiency (CAFE-3) norms, stating that the current version released on April 8 should remain unchanged without further additions.

This was conveyed in meeting on Thursday between the industry and secretaries of the Ministries of Power (MoP), Road Transport & Highways (MoRTH), and Additional Secretary, Ministry of Heavy Industries (MHI). During the meeting, the government proposed introducing an E25 fuel mixture in the near future, advising the industry to begin preparations immediately, according to sources.

What the industry has agreed to are draft CAFE-3 norms, effective from April 2027 to 2032, that shift India’s regulatory focus toward total fleet emission reductions rather than vehicle size. To reach net-zero goals, the framework introduces a market-based credit trading system besides incentivizing the shift to electric, hybrid, and flex-fuel vehicles.

During the meeting on Thursday, secretaries urged the industry to prioritise all fuel types that contribute to decarbonisation while reducing India’s reliance on oil imports.

While some small car manufacturers requested specific categorisation, other players opposed the move, arguing that a consensus had already been reached. The industry maintained that the current format should not be diluted or reconsidered, insisting that no new elements be added to the existing draft.

Government sources indicated that the industry requested more flexibility regarding super credits for electric and hybrid vehicles. Instead of the proposed three-year and two-year split, manufacturers suggested applying the credits directly at the end of the five-year period, a proposal the government has agreed to consider.

Published on April 16, 2026