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Business News›Industry›Auto›Auto News›CAFE-III gives auto industry investment clarity, supports cleaner technology adoption: Industry Experts

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CAFE-III gives auto industry investment clarity, supports cleaner technology adoption: Industry Experts
Synopsis

Industry leaders have welcomed India’s CAFE-III norms, saying the five-year framework provides automakers with greater policy certainty for technology investments and innovation. SIAM, Mahindra and the All India Distillers’ Association highlighted the balance between environmental goals, industry feasibility and energy security. The norms also recognise EVs, hybrids, ethanol-blended fuels and flex-fuel vehicles, supporting wider clean-mobility and biofuel adoption.

ANI

New Delhi: The government's new Corporate Average Fuel Economy (CAFE-III) norms give the automobile industry a clear plan for future technology investments. Industry representatives said the norms aim to balance environmental goals with flexibility for companies. The new framework is also expected to encourage the use of flex-fuel vehicles and biofuels.



Welcoming the notification, Society of Indian Automobile Manufacturers (SIAM) President Shenu Agarwal said the five-year framework provides predictability for automakers to plan investments and accelerate innovation.



"CAFE III regulation lays down a structured roadmap with aggressive annual targets for next 5-years for the Auto industry along with a market-based compliance mechanism," he said.

Agarwal said the framework would reduce overall fuel consumption from new passenger vehicles while allowing manufacturers to pursue different technology pathways, further adding that the framework "provides clear predictability which will enable the Auto industry to plan investments and accelerate innovation".



Mahindra President, Automotive Business, Velusamy R said the framework strikes a balance between environmental requirements and what is achievable for the industry, while also strengthening energy security.




"The framework strikes a pragmatic balance between what is necessary for the environment and what is achievable for the industry, while strengthening India's energy security," Velusamy said.

He welcomed provisions including compliance blocks, technology credits, cleaner-fuel benefits and super credits for electric vehicles and other advanced technologies. "The targets are appropriately ambitious and provide a clear trajectory through 2031-32," he added.

The new CAFE norms, which take effect from April 1, 2027, target a 16.7 per cent improvement in passenger vehicle fuel efficiency by 2032. The framework also recognises alternative fuels and cleaner technologies, including ethanol-blended petrol, biofuels, EVs, hybrids and flex-fuel vehicles.



All India Distillers' Association President Vijendra Singh said the framework could strengthen the link between India's ethanol industry and clean mobility. He said the recognition of ethanol and flex-fuel vehicles through a 22.3 per cent Carbon Neutrality Factor and 1.1x super-credit provides greater policy visibility to biofuels.



"The focus now should be on building the wider FFV ecosystem, including vehicle availability, fuel infrastructure and consumer awareness," Singh said, adding that this would be important for translating India's ethanol capacity into greater clean mobility adoption.

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