OEMs upset as yet another set of changes proposed for CAFE III norms

The BEE has not made the latest draft of the CAFE III norms public, unlike earlier instances.

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“This is like comparing apples and oranges”, said the CEO of one of India’s top OEMs at a recent meeting to discuss the CAFE III norms. The meeting had been called after the Bureau of Energy Efficiency (BEE) proposed yet another set of changes to the draft norms for determining Corporate Average Fuel Efficiency (CAFE) norms from FY27-FY32.This was the third instance of changes proposed by BEE, and the CEO was reacting to the fact that, while the bureau spoke about one prominent change in the latest draft, it completely avoided another, related change.“No one expected the CEO of a large OEM to actually do the math there and then and point out that the BEE was being selective in its explanation. But this is exactly what happened, it was a rather heated meeting,” said a representative of one of the OEMs who was present at this meeting.Also read:
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Senior officials from the Ministry of Heavy Industries, representatives of the Society of Indian Automobile Manufacturers (SIAM), CEOs of top OEMs, BEE officials, and representatives of the Ministry of Power were also present.

The BEE has not made the latest draft of the CAFE III norms public, unlike earlier instances. The person quoted above said that the industry has now asked the government to avoid creating confusion by introducing multiple changes to the proposals and to finalise the CAFE III norms. He said that while earlier the government seemed keen to finalise these norms by February, the process could now be delayed due to confusion in the latest round of consultations.

What changed

In the new BEE proposal, the emission slope has been changed. Compared to the initial draft released in September 2025, the slope has been made flatter, meaning that, against the initial 0.002 value for all five years of CAFE III, the new proposal is 0.00153 in year one, then reducing annually to reach 0.00128 in the fifth year.

BEE’s logic is that the adjustment in the emission slope reduces the CO₂ emission target allowance for heavier vehicles, forcing faster adoption of hybrids/EVs, while also providing relief to manufacturers of smaller, lighter cars.

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As per the new proposal, a copy of which has been seen by ETAUTO, “flatter slope reduces the extent to which lighter vehicle weight translates into a more relaxed target. Thus, manufacturers with heavier fleets receive less weight-based relaxation and are required to achieve a stronger, intrinsic efficiency improvement”.Another change in the latest BEE proposal is the removal of the earlier relaxation of 3 g/l in the emission targets for small cars (weighing up to 909 kg).

What was left unsaid

An industry representative pointed out that, in addition to changing the slope to make it flatter, the new proposal has also changed the ‘b’ value, or the industry-average weight. The September proposal had this at 1170 kg, but it has now been increased to 1229 kg.

This increase wasn’t spoken about when BEE was explaining the new proposal. This single change effectively means the 4g/litre relaxation in emission target for year one actually translates to only 2g/litre.Industry representative

“This increase wasn’t spoken about when BEE was explaining the new proposal. This single change effectively means the 4g/litre relaxation in emission target for year one actually translates to only 2g/litre,” this person said, requesting anonymity.Also read:
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Then, not only will the effective relaxation in year one be half of what is projected, but removing the 3g/litre relaxation in emission targets for lighter cars would mean that entry-level cars will still need to cut emissions by 36 per cent by year five. Basically, the 36 per cent cut in CO2 emissions will apply to all cars regardless of weight. As per the September 2025 proposal, an entry-level car such as the Alto had to achieve a 47 per cent emission cut, but will now need to achieve 36% anyway.

Small car OEMs upset

An industry representative pointed out that a small car, like the Alto, currently emits 96 g/l, while a large SUV could exceed 200 g/l.

A 36% stringency for entry level cars translates to 62 g /l . The world’s best small car wih the least carbon di oxide emission is at 88 g/l. So achieving this for entry level cars is not only unrealistic, it also overlooks engineering reality.Industry representative

“The latest BEE proposal looks fine on paper but will mean disproportionate reduction in emissions for small cars. A 36% stringency for entry level cars translates to 62 g /l . The world’s best small car wih the least carbon di oxide emission is at 88 g/l. So achieving this for entry level cars is not only unrealistic, it also overlooks engineering reality,” this person said.

Also read:
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Earlier, small-car OEMs have already pointed to global norms to seek significant relaxation of emission mandates.

“Globally, regulators split the CAFE curve into two and this is then called piece wise linear CAFE target. As the car weight reduces, CO2 reduction can happen only upto a point, not beyond that. China, for example, has b value at 1090 kg point but for cars lighter than this, their regulator has not tightened the emission slope. South Korea uses 1110 kg…But Europe has actually relaxed targets for small cars in CAFE III versus CAFE II instead of tightening them,” the person quoted above said.