New CAFE 3 Norms Benefit Small Cars the Most

India’s latest draft of the Corporate Average Fuel Consumption (CAFE) Stage 3 norms brings a noticeable shift in emission targets.

The updated proposal is less strict than the earlier version, offering relief to carmakers, especially in the small car segment.

Revised Formula Makes Targets Easier

While the basic formula to calculate fuel efficiency remains unchanged, key constants in the equation have been revised.

The multiplier has been reduced, while the reference vehicle weight and baseline fuel consumption figures have been increased.

This change shifts the emission curve upward, allowing higher CO₂ emissions for the same vehicle weight compared to the earlier draft.

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Small Cars Get the Biggest Advantage

Since CAFE norms are directly linked to vehicle weight, smaller cars benefit the most from the revised framework.

These cars sit well below the reference weight, so even small changes in the formula translate into a larger relaxation in emission limits.

Earlier, the draft had proposed a separate benefit for sub-4 metre petrol cars. That has now been removed, but the revised curve still gives them a clear advantage.

Impact on SUVs and Larger Vehicles

Larger cars and SUVs will also see some benefit, but the impact is relatively smaller.

Because they are closer to the reference weight, the easing in emission limits is not as significant as it is for smaller vehicles.

Changes in EV and Hybrid Credits

The updated draft continues to promote cleaner vehicles through “super credits.”

Electric vehicles will still count as three vehicles when calculating fleet emissions. However, the benefit of strong hybrids and flex-fuel vehicles has been reduced.

Strong hybrids will now count as 1.6 vehicles, while flex-fuel models will count as 1.1, down from earlier values.

Implementation Timeline

The new CAFE Stage 3 norms are scheduled to come into effect from April 1, 2027.

These regulations apply to passenger vehicles under the M1 category, covering cars designed to seat up to nine occupants.

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