New Delhi: A draft of India’s new car fuel efficiency norms has reached the Prime Minister’s Office (PMO) after consultation with stakeholders, according to Union Minister HD Kumaraswamy.
“The Union Ministry of Power held a meeting with the stakeholders and after the meeting they sent a proposal to the PMO,” Kumaraswamy, who is the Union Minister for Heavy Industries and Steel, said at an event organized by industry lobby Ficci.
The Departments of Road Transport and Highways, Heavy Industry and Energy have been working on the third iteration of the Corporate Average Fuel Efficiency (CAFE-3) standards, which will come into effect in April 2027 and guide automakers’ strategy in the world’s third-largest auto market by sales.
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CAFE standards are essentially a cap on an automaker’s total fleet emissions, forcing them to produce cars with better fuel efficiency and use cleaner powertrains, such as electric vehicles; hybrids that run on batteries and fossil fuels; and flex-fuel vehicles, which mix biofuels like ethanol with gasoline.
The standards have divided the auto industry, with one faction seeking incentives for smaller, lighter cars and the other opposing any benefits based on car weight. Mint had earlier reported that car makers may face compliance issues CAFE-3 because the time between notification and enforcement is shorter than in previous iterations.
India’s CAFE norms must be created for future technologies and not for bridge technologies like hybrids, former NITI Aayog CEO Amitabh Kant said at the Ficci event.
When asked about the government’s view on bridge technology, Kumaraswamy replied Mint that it will do whatever it takes to support the adoption of EVs.
EV adoption
India’s electric car adoption will reach 4% in 2025, according to a February 2026 CII-Kearney report. According to Mordor Intelligence, India’s EV market is poised to grow to around $110 billion by 2029, from around $55 billion in 2025.
Kumaraswamy also said India’s EV sector will benefit from many free trade agreements (FTAs), including those with the European Union, United Kingdom, Australia, United Arab Emirates and others, as these agreements provide new export destinations.
“As our manufacturing depth increases, so does our export potential. Over the past decade, exports of automotive components have nearly doubled, rising from around $8 billion to $16.9 billion, reflecting India’s deepening integration into global value chains and its growing credibility as a manufacturing hub,” Kumaraswamy said.
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This comes at a time when India is de-risking its critical supply chains, particularly in the wake of rare-earth magnet crunch that has worried manufacturers. These magnets are essential in key sectors such as defense, electronics, automobiles and renewable energy.
To prevent it from exploiting its dominance over key parts of the global supply chain, India has created its own magnets with government support.
In December, the government announced a program to support the production of sintered rare earth permanent magnets (REPMs), ₹7,280 crore package to support setting up of five manufacturing plants. Kumaraswamy said securing critical minerals is essential for long-term competitiveness.
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