India finalizes CAFE-3 fuel-efficiency rules, removes small-car exemption

The Ministry of Power formally notified the CAFE-3 emission standards, which will govern vehicle fleets from April 2027 to March 2032. The final rules discard the September 2025 draft’s 3 g/km concession for petrol cars weighing up to 909 kg, a demand championed by Maruti Suzuki India. Instead, the reference vehicle weight is set at 1,229 kg with a gentler weight-based multiplier, granting lighter manufacturers a modestly softer target and imposing stricter limits on heavier models.

The super-credit scheme now counts each battery electric or range-extended electric vehicle as three units, with lower multipliers for plug-in hybrids and strong hybrids. A new credit-debit system lets firms earn surplus credits or purchase deficits, with trading open each October and buy-out prices rising from Rs 2,500 to Rs 4,500 per gram of CO₂ per km over the compliance period.