Corporate Average Fuel Efficiency (CAFE) Norms in India

India is also in the process of making major changes in its automotive regulatory system by drafting the introduction of the third round of its Corporate Average Fuel Efficiency (CAFE) standards. These norms are one of the pillars of the national plan to make the transport industry more sustainable and efficient.

Definition and Governance
CAFE norms are state laws that compel automobile companies to have a certain average of fuel economy in their fleet. This method of average corporate performance, as opposed to the standards imposed on each vehicle model, offers a degree of flexibility, thereby enabling the automakers to offset their less efficient vehicles with cleaner vehicles. The Bureau of Energy Efficiency (BEE) of the ministry of power administers the policy.

Implementation and Scope Phased.
India took these norms in a systematic and planned way to give the industry time to adapt. The initial phase was implemented in 2017-18, and a stricter second phase was implemented in 2022-23. The third and newly proposed version (CAFE-3) will seek to make these requirements even more stringent. These regulations apply to all passenger motor vehicles a gross weight of less than 3500 kg regardless of their powertrain. It encompasses the vehicles with standard fuels, such as petrol and diesel, alternative fuels, such as LPG and CNG, the hybrid and electric vehicles (EVs).

Strategic Objectives
The CAFE norms are meant to accomplish three- vital national goals:

• Increase Energy Security: The norms have the direct effect of reducing the heavy dependence the country has on imported crude oil, which has been a significant cause of fiscal stability and energy independence.
• Fight Environmental Pollution: One such direct way to reduce emission of carbon dioxide (CO2), a major greenhouse gas, and other wastes is through control of fuel consumption. This contributes to the better air quality in cities and is in line with the climate commitments of India.
• Rapidly expand the use of Clean Technology: The fleet-average tool would provide a powerful incentive to manufacturers to invest and sell a larger number of greener vehicles. In order to compensate the ever more demanding targets, businesses are urged to increase their supply of EVs, CNG cars, and hybrids, thus, speeding up the transition of the market towards cleaner mobility solutions.

Finally, the CAFE norms are one of the central policy tools. The fact that they are still being developed, and the latest approach of CAFE-3 standards is put forward, shows the persistent intention of India to reconcile economic development of the automotive sector with the need to preserve the environment and energy security.