The Society of Indian Automobile Manufacturers (SIAM) has welcomed the Government of India’s notification of the Corporate Average Fuel Economy (CAFE-III) norms for passenger vehicles, describing the framework as a structured roadmap for the automobile industry over the next five years.
The new norms will come into effect from 1 April 2027 and set progressively tighter fuel-efficiency requirements for passenger vehicle manufacturers.
Five-year roadmap for industry
SIAM President Shenu Agarwal said the CAFE-III regulation provides aggressive annual targets for the next five years along with a market-based compliance mechanism.
“CAFÉ III regulation lays down a structured roadmap with aggressive annual targets for next 5-years for the Auto industry along with a market-based compliance mechanism,” said Agarwal.
According to Agarwal, the framework will help reduce overall fuel consumption from the new passenger vehicle fleet while allowing manufacturers to pursue different technology pathways.
“This will not only ensure reduction of overall fuel consumption from new Passenger Vehicle fleet but also provide an opportunity to the industry to work on various technology pathways providing multiple choices to the consumers,” he said.
Predictability to support investment
SIAM said the framework provides greater clarity and predictability for the automobile industry, allowing manufacturers to plan investments and accelerate innovation over the five-year compliance period.
The industry body said the regulatory certainty provided by CAFE-III would support manufacturers as they develop and deploy technologies aimed at improving vehicle efficiency and reducing fuel consumption.
SIAM also linked the framework to India’s longer-term development objectives, saying the auto industry would play an important role in the country’s journey towards Viksit Bharat in 2047.
Industry welcomes consultation process
SIAM thanked the Government of India for adopting what it described as a detailed and transparent consultative approach while framing the regulation.
Agarwal said the framework followed an objective and balanced assessment of various clean-technology options, giving the industry greater visibility on the regulatory direction while retaining flexibility in technology choices.
The CAFE-III framework, notified by the Ministry of Power, will replace the existing CAFE norms from 1 April 2027 and remain applicable until 31 March 2032.