India's draft CAFE-III norms explained: New fuel-efficiency rules for cars from 2027

India's Bureau of Energy Efficiency has released draft CAFE-III norms for passenger vehicles, set to apply from FY2027-28 to FY2031-32. The key change is a shift from the older MIDC test cycle to the more realistic WLTP testing method, which better reflects real-world driving conditions. The proposed carbon target under CAFE-III is 91.7 grams per kilometer under WLTP, with a further reduction to 70 g/km planned for CAFE-IV. The draft also revises super-credit multipliers for cleaner vehicles: hydrogen fuel-cell vehicles get a multiplier of five, battery electric vehicles retain four, while plug-in hybrids and strong hybrids see reduced incentives. Compliance will be assessed annually over a five-year block, with penalties calculated for the entire cycle. Carmakers have nearly two years before the new regime takes effect, and the changes could push more hybrid and electric models into the market while encouraging fuel-saving technologies like regenerative braking.