NEW DELHI: H D Kumaraswamy, Minister of Heavy Industries and Steel, said on Wednesday that the power ministry has sent the proposal on the Corporate Average Fuel Efficiency (CAFE)- III norms to the Prime Minister's Office (PMO) after a meeting with stakeholders. The fresh development comes as India’s auto industry remains divided over the treatment of small cars and changes in technical definitions.
“We already had a meeting with stakeholders and power ministry. The power ministry, according to my information, now, after the meeting with stakeholders they have sent the proposal to PMO,” said Kumaraswamy on the sidelines of an event organised by FICCI. The minister, however, disclosed which draft has been forwarded to the PMO.
So far, two drafts of CAFE-III norms have been made public for inputs. Much of the industry’s tussle revolves around the second draft which was released in September 2025. This draft seeks to make average CO2 emissions stricter from April 2027 while offering some relief for small petrol cars.
Tata Motors Passenger Vehicles Ltd Managing Director & CEO Shailesh Chandra had said in November that no leniency must be granted to small cars in the CAFE-III norms on the basis of weight and affordability as it would compromise safety features while distracting from concrete action towards sustainable mobility.
However, market leader Maruti Suzuki India has been vocal in proposing such a concession for small cars and its Chairman R C Bhargava had argued that the idea behind CAFE norms was to make big cars improve fuel efficiency and reduce emissions.
The CAFE norms, started from 2017, set a limit on average fuel consumption and CO2 emissions of a manufacturer's overall fleet with an aim to push carmakers to improve their overall fuel efficiency and reduce emissions. The CAFE 2 began in 2022 and the next phase CAFE 3 is all set to start from April 2027.
The updated emission norms require fleet-wide CO2 emissions to be lowered to 91.7 grams per kilometer. The most recent draft also includes a proposed CO2 allowance of 3g/km for each reporting year applicable to vehicles weighing less than 909 kg, equipped with engines up to 1200 cc, and measuring under 4 meters in length. This concession is capped at a maximum of 9 g/km in total.
A section of carmakers believes that emission norm relaxations should not extend to cars weighing up to 909 kg, having engine capacities up to 1200 cc, and lengths below 4000 mm. They pointed out that Maruti Suzuki dominates this segment, holding over 95% market share for vehicles under 909 kg.
The carmaker argued that if any CO2 emission concessions are to be granted, they should cover all cars weighing up to 1170 kg, which reflects the industry’s current average.