Amitabh Kant Calls CAFE-III Norms A ‘Huge Missed Opportunity’, Questions EV Push

Former NITI Aayog CEO Amitabh Kant has criticised the newly notified Corporate Average Fuel Economy (CAFE)-III norms, describing them as a “huge missed opportunity” and questioning whether the framework does enough to accelerate the shift towards electric mobility.

The Ministry of Power notified the final CAFE-III norms late on Tuesday. The regulations will come into effect from April 1, 2027 and remain applicable until March 31, 2032. They cover new passenger vehicles manufactured or imported for sale in India.

Also read: CAFE-III Norms Notified Without Small-Car Concession, 3x Credit For EVs

“This was an opportunity to technologically leapfrog like India has done with UPI & Smartphones. Instead, it is a case of a huge missed opportunity. The new CAFE norms are backward looking at worst and status quoist at best. They lack vision and a clear road map for the future. The regulation follows the industry instead of leading it. EVs become one option among many, when they should be the destination,” Kant said in a post on X, formerly Twitter, on Wednesday.

CAFE, or Corporate Average Fuel Economy, establishes fleet-level fuel-efficiency and CO2 performance requirements for individual carmakers. The applicable target is calculated based on the average weight of vehicles sold by each company.

CAFE-III Sets Tighter Fuel-Consumption Targets

Under CAFE-III, the fuel-consumption benchmark will be tightened from 3.996 litres per 100 km in FY28 to 3.3273 litres per 100 km in FY32. This translates into an improvement of around 16.7 per cent over the five-year period.

The framework also provides additional compliance benefits for EVs, with battery electric vehicles and range-extended EVs receiving a 3x volume derogation factor.

Kant, however, questioned whether the framework sets sufficiently ambitious targets for electric vehicle adoption.

“We import almost 90 per cent of our oil. We are building battery and EV manufacturing capacity. Our fuel-efficiency rules should push the industry toward that future, not give it room to delay,” he said.

Kant also highlighted the EV adoption target under the new norms. According to him, CAFE-III targets 11 per cent electric cars by 2032, while EVs are already close to 8 per cent of car sales in the current financial year.

He also raised questions over the provision that allows the Bureau of Energy Efficiency (BEE) to sell compliance credits. 

“How can BEE sell credits? A regulator can’t be a player in the market it regulates,” he said.

Auto Industry Welcomes New Framework

The finalisation of CAFE-III norms after months of tussle over relief for small cars drew a positive response from leading automakers Maruti Suzuki, Hyundai Motor India and Tata Motors. The auto OEMs have welcomed the Centre's approach, while pointing to the recognition of multiple powertrain technologies, credit-based compliance as well as the the longer compliance structure under the new CAFE-III norms.