India’s CAFE-III rules set progressively tighter fuel-consumption limits for manufacturers’ average fleets of covered passenger vehicles from 1 April 2027 through 31 March 2032. They may influence how carmakers plan vehicles and powertrains for India, but they do not require every model to meet one mileage figure—and the rules alone do not establish which cars will change or what buyers will pay.
What CAFE-III is and when it applies
CAFE-III is the third phase of India’s Corporate Average Fuel Economy standards. The Ministry of Power notified the rules in Gazette notification S.O. 5346(E), dated 29 September 2026; implementation begins on 1 April 2027. The standards run through 31 March 2032. Read the final notification and the Ministry of Power summary published 30 September 2026.
The rules cover M1-category vehicles manufactured or imported for sale in India. In the notification’s terms, that category includes passenger vehicles with up to nine seats, including the driver, and gross vehicle weight not exceeding 3,500 kg. Listed exemptions include invalid carriages, special-purpose vehicles and vehicles exempt from CMVR type approval. Manufacturers with annual sales below 1,000 units are also exempt from fleet-average obligations, according to the Ministry summary.
How the fleet-average standard works
CAFE-III regulates a manufacturer’s covered fleet average, not the fuel consumption of each car individually. The standard is expressed in petrol-equivalent litres per 100 km and calculated on the Modified Indian Driving Cycle (MIDC). The notification sets a formula of a × (W − b) + c, where W is the manufacturer’s weighted average unladen mass for its covered new vehicles and the constants vary by year. The calculation therefore accounts for fleet weight as well as fuel consumption. BEE’s CAFE overview likewise distinguishes corporate averages from an individual model’s consumption.
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The Ministry’s benchmark values tighten over the five financial years. They are regulatory fleet-calculation figures, not a promise of the mileage an owner will see in everyday driving.
| Financial year | Benchmark (petrol-equivalent L/100 km) |
|---|---|
| 2027–28 | 3.9960 |
| 2028–29 | 3.8600 |
| 2029–30 | 3.7585 |
| 2030–31 | 3.5313 |
| 2031–32 | 3.3273 |
The Ministry describes the change between the first and last benchmark as an improvement of around 16.7%. That is a change in the stated regulatory benchmarks, not a forecast of an equivalent reduction in fuel use by every vehicle or household. The notification uses MIDC for its calculation, while the Ministry summary says reporting is undertaken under both MIDC and WLTP. Do not treat these litres-per-100-km figures as advertised km/l or direct real-world comparisons.
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- Plug and Play: This automotive gauge is easy to install, requiring no complicated wiring or professional installation; it connects directly to the vehicle's system.
- Fuel Economy Monitoring: Designed to help track and optimize fuel consumption, allowing drivers to monitor vehicle efficiency and potentially reduce fuel costs.
- Portable Design: This compact and lightweight gauge can be easily moved between different vehicles or removed when not needed. This fuel economy monitor can easily fit into your armrest box.
- Universal Compatibility: Suitable for vehicles using gasoline, diesel, water, and lubricants, making it suitable for a wide range of automotive applications.
Why vehicle weight matters
The permitted standard depends on the weighted average unladen mass of a manufacturer’s covered fleet. In its summary, the Ministry says the reference weight rises from 1,082 kg under the existing norms to 1,229 kg under CAFE-III, an increase of about 13.6%. It characterizes the revised line as relatively softer for lighter vehicles and more demanding for heavier ones. This changes how the fleet target relates to weight; it does not create a separate universal mileage target for each size class.
How manufacturers may comply
Carmakers can manage the fleet calculation through a combination of vehicle efficiency, qualifying technologies, eligible fuels and powertrains, and credits. The Ministry says the list of recognized fuel-conservation technologies expands from four to twelve. The final notification specifies the eligibility and verification rules; not every feature on a vehicle necessarily qualifies in every period.
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Recognized efficiency technologies
The notification lists technologies including start-stop systems, tyre-pressure monitoring, regenerative braking, transmissions with six or more speeds, efficient alternators, motor-generators, exterior LED lighting, advanced glazing, electric water pumps, high-efficiency air conditioning, solar-reflective paint and PWM-controlled radiator fans. It provides a 1 g CO₂/km derogation for each eligible technology, up to a 9 g CO₂/km cap. Certification and verification treatment differs across block periods.
Fuel and powertrain adjustments
The Ministry summary discusses ethanol-blended petrol, biofuels and compressed biogas in connection with the Carbon Neutrality Factor. It also says battery electric vehicles (BEVs), range-extended electric vehicles (REEVs), plug-in hybrid electric vehicles (PHEVs), strong hybrids and flex-fuel vehicles receive volume derogation factors, or “super credits,” in fleet calculations. These are distinct regulatory adjustments, not a rule that any alternative-fuel vehicle automatically satisfies a manufacturer’s obligation.
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Credits and other flexibility
The framework provides for specified two- or three-year compliance blocks, carry-forward of eligible credits, exchange or trade of eligible credits between manufacturers, and a buyout administered by BEE, subject to the notification’s conditions. These options give manufacturers more than one route to compliance; the final notification governs the details.
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Because the obligation applies to a manufacturer’s overall fleet, a carmaker could respond with a mix of more efficient conventional vehicles, hybrids, electrification, qualifying technologies, eligible fuels or compliance credits. The rules create an incentive to manage the efficiency of India-bound sales as a whole. They do not identify the exact combination any manufacturer will choose.
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As of 3 October 2026, the Ministry summary and final notification do not provide manufacturer-by-manufacturer plans, a list of models that will be redesigned or withdrawn, predicted retail prices, or independent estimates of owner fuel savings attributable to CAFE-III. A model-specific change or price effect should not be presented as a consequence of the regulation without separate, direct evidence.
When comparing cars, keep separate the vehicle’s certified efficiency and test cycle, its fuel or powertrain, purchase price and running costs, size and suitability for your use, and real-world driving conditions. A manufacturer fleet rule cannot answer those questions for an individual model.
CAFE phases and the status of the 2027–32 rules
India’s earlier CAFE phases applied from 2017–18 and 2022–23, according to BEE’s overview. BEE circulated a draft for the next phase on 25 September 2025, but that draft has been superseded for current requirements by the final notification. The earlier draft is historical context, not the controlling 2027–32 rule.
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