Government may do away with exception for small cars in CAFE 3 norms

Formula tweak under discussion to set lenient targets for vehicles weighing less than 1,229 kg

The Bureau of Energy Efficiency (BEE) is likely to remove, in the final notification, the provision granting special relief to petrol cars weighing under 909 kilogram (kg) that was introduced in the September 2025 draft of the upcoming Corporate Average Fuel Efficiency – Phase 3 (CAFE-3) emission norms. 

Instead, the BEE plans to modify the main equation itself — which is used to calculate each car manufacturer’s average carbon dioxide emission target — to ensure more lenient targets for vehicles weighing below 1,229 kg and stricter targets for those above that threshold, Business Standard has learnt. 

This rethink came as the spat among automakers over the provision, which introduced an additional 3 grams per km (g/km) deduction for sub-909 kg cars, escalated to the highest levels of government. JSW MG Motor, Tata Motors, and Kia wrote to the Prime Minister’s Office (PMO) in December, arguing that the separate carveout would disproportionately benefit a “single carmaker” that has about 95 per cent share of the sub-909 kg segment. 

Maruti Suzuki India Ltd (MSIL) pushed back strongly. Rahul Bharti, senior executive officer (corporate affairs), MSIL, warned that cars weighing under 909 kg could be discontinued if the upcoming CAFE-3 carbon dioxide targets are “unscientific and unjust”, accusing makers of “large gas guzzlers” of pushing “irresponsible” narratives to divert attention from their larger, more fuel-intensive models. 

CAFÉ-3 norms would be applicable between 2027-28 (FY28) and FY32. 

A BEE official said the main equation in the final notification — compared with the one proposed in the September 2025 draft — is likely to be revised in a manner that would give a 909 kg car additional relief of between 4.51 g/km and 5.31 g/km each year from FY28 to FY32. “In this way, we have tried to take care of each stakeholder’s viewpoint on the matter,” the official added.

CAFE norms require carmakers to limit the average carbon dioxide emissions, measured in g/km, of all passenger vehicles they sell in a year. Instead of a fixed limit for each model, the rules calculate a sales-weighted average across the manufacturer’s fleet, aiming to reduce emissions industry-wide while accounting for the fact that heavier vehicles emit more carbon dioxide. 

What final CAFE notification could say 

The September 2025 draft proposed the following main equation: [0.002 × (W − 1170) + c] × 23.71, where "W" is the vehicle’s weight and "c" is a constant that gradually decreases each year, from 3.7264 in FY28 to 3.0139 in FY32. 

The BEE, in its fresh policy note, stated that the "relatively steeper slope (0.002)" in the September 2025 draft allowed targets to increase more sharply with vehicle weight, thereby providing greater relaxation to manufacturers with heavier fleets. At the same time, lighter-fleet manufacturers faced comparatively tighter targets as per the equation mentioned in the September 2025 draft, it informed. 

To ease the targets for lighter cars, the BEE now plans to revise the equation to: [0.00153 × (W − 1229) + c] × 23.71, with a new constant "c" starting at 3.8844 in FY28 and gradually falling to 3.2053 in FY32, according to the policy note. 

"The slope is reduced to 0.00153... while the reference weight is updated to 1,229 kg, reflecting the current industry average weight. The flatter slope reduces the extent to which higher vehicle weight translates into a more relaxed target. As a result, manufacturers with heavier fleets receive less weight-based relaxation, and are required to achieve stronger intrinsic efficiency improvements," the note added. 

Therefore, using the main equation proposed in the September 2025 draft, the emission limit for a 909 kg car in FY28 works out to 75.98 g/km. Under the main equation that is likely to be notified in the final CAFE-3 norms, the limit would rise to 80.49 g/km, implying a relaxation of 4.51 g/km for a 909 kg car in FY28. 

Similarly, for FY29, the September 2025 draft equation yields an emission limit of 72.36 g/km for a 909 kg car. Using the equation likely to be adopted in the final notification, the limit increases to 77.01 g/km, translating into a relaxation of 4.65 g/km for FY29, according to the BEE official. 

The Society of Indian Automobile Manufacturers (Siam) and the BEE did not respond to Business Standard's queries on this matter. 

What happened before 

The BEE released the first draft of the CAFE-3 norms in June 2024. Siam submitted comments in December 2024, seeking changes. Months later, MSIL — India’s largest carmaker and small-car seller — independently sought a separate weight-based exemption for small cars, a move that split the industry. 

In September 2025, the BEE revised the draft CAFE-3 norms and, for the first time, introduced weight-based relief, proposing an additional 3 g/km deduction for petrol cars weighing under 909 kg. Two months later, Siam submitted its comments on the revised draft, acknowledging that its members could not reach a consensus on the proposed exemption for sub-909 kg cars.