Automakers Back CAFE 3 Draft Norms, Small-Car Debate Still Continues

India’s auto industry appears to have moved closer to consensus on the proposed CAFE 3 fuel-efficiency norms, with most major carmakers supporting the draft framework and urging the government to notify it quickly. The latest discussions suggest that the industry broadly accepts the direction of the rules, even if some companies still want changes around small cars and compliance support.

Broad Support for New Framework

In the recent stakeholder meeting held on April 16, automakers described the draft as a balanced framework, despite its stricter targets. The meeting saw participation from representatives of all major OEMs, including Maruti Suzuki, Tata Motors, Mahindra, Mercedes-Benz and JSW MG, as well as officials from the Ministry of Power, the Ministry of Road Transport and Highways, the Ministry of Heavy Industries, and the Ministry of Petroleum and Natural Gas.

Industry body SIAM said the government’s approach leaves room for flexibility through technology derogations, volume derogations, pooling and credit purchases, which should make compliance more manageable. SIAM also asked for the draft to be notified soon so companies have enough time before the 1 April 2027 implementation date.

The proposed norms cover the period from April 1, 2027 to March 31, 2032, and aim to bring down average fleet emissions further over the phase. The CAFE norms have become steadily more stringent over time, with CO₂ limits dropping from 130 g/km in the first phase to 113 g/km in the second, and now heading towards a much tougher 78.9 g/km target by FY32 under the proposed third phase.

Small cars remain the main sticking point

Even as the wider industry backed the draft, the small-car question resurfaced. Maruti Suzuki again sought separate treatment for small cars based on weight, with support from Honda Cars India and Nissan Motor India, while several other manufacturers backed moving ahead with the recently proposed April draft as it stands.  Some companies wanted a new category for small cars, though others argued the revised slope already eases the burden on lighter vehicles.

The government, however, appears unwilling to reopen settled parts of the proposal as officials have rejected calls for extra relief for small cars and also did not agree to raise EV credit weightage beyond the levels already proposed. Under the draft, small cars already receive some relaxation, while electric vehicles are allocated three super credits.

Also READ: Draft CAFE-3 Norms Eases Emission Targets For Auto Industry, Relief To Small Cars

Why the timing matters

Automakers want the final notification issued quickly because the industry has limited time to prepare for the 2027 rollout. Some executives reportedly said there was no discussion of delaying implementation, which suggests that the broader direction is settled even if a few details remain under debate.

Overall, the draft CAFE 3 norms seem to have crossed an important threshold: most automakers are prepared to accept tighter fuel-efficiency rules, provided the final framework preserves enough flexibility for compliance. The remaining debate is now less about the direction of policy and more about how evenly its burden is shared across vehicle segments.