India is preparing to implement CAFE III, the third phase of its Corporate Average Fuel Efficiency framework. The new rules aim to lower average fleet emissions for passenger vehicles from 113 g/km in 2027 to 78.9 g/km by 2032. The framework introduces a carbon credit trading system where manufacturers exceeding efficiency targets can sell credits to those lagging behind. It also adjusts incentives for strong hybrids and flex-fuel vehicles while maintaining a high credit multiplier for electric vehicles.
