The Bureau of Energy Efficiency (BEE) has invited comments from stakeholders on the draft Corporate Average Fuel Efficiency (CAFE III) Rules.
In a relief to small cars, the draft Rule has said that cars shorter than four meters, weighing less than 909 kg and powered by sub-1200 cc engines will get an advantage of 3 grams while calculating carbon dioxide (CO2) emissions.
The draft Rule has introduced a super-credit system to ensure a fast transition to clean technology. Under this, green vehicles receive higher weight in fleet-average calculations. This is expected to significantly boost the incentive for automakers to invest in low- and zero-emission vehicles.
The draft also includes a carbon neutrality factor (CNF) that discounts tailpipe CO2 emissions for vehicles running on ethanol blends, CNG, or flex fuels. Petrol vehicles using E20-E30 blends will get an 8% CO2 discount, while flex fuel hybrids can get up to 22.3%.
However, the draft removes hydrogen technology, which was included in the previous CAFE-III proposal released in June 2024. The BEE has sought stakeholders’ comments on the draft norms within 21 days from the date of issuance of the office memorandum (September 25, 2025).
