Amitabh Kant calls CAFE-III norms a ‘huge missed opportunity’, says EV roadmap lacks ambition

Reports coming in for today mention that Former NITI Aayog CEO Amitabh Kant has called India’s newly notified Corporate Average Fuel Economy (CAFE)-III norms a “huge missed opportunity”, arguing that the framework does not propel the automobile industry fast enough towards electric mobility.

“This was an opportunity to technologically leapfrog like India has done with UPI & Smartphones. Instead, it is a case of a huge missed opportunity. The new CAFE norms are backward looking at worst and status quoist at best. They lack vision and a clear road map for the future. The regulation follows the industry instead of leading it. EVs become one option among many, when they should be the destination,” Kant stated in a post on X on September 30.

The Ministry of Power notified the final CAFE-III norms on September 29. The rules will apply from April 1, 2027 to March 31, 2032 and cover new passenger vehicles manufactured or imported for sale in India. CAFE, or Corporate Average Fuel Economy, essentially sets a fleet-level fuel-efficiency and CO2 performance requirement for each carmaker, with the target calculated based on the average weight of vehicles sold by the firm.

Under the new framework, the fuel-consumption benchmark will tighten from 3.996 litres per 100 km in FY28 to 3.3273 litres per 100 km in FY32, requiring an improvement of around 16.7% over five years. Carmakers can meet the targets through improvements in vehicle efficiency as well as cleaner technologies and alternative fuels. EVs get additional compliance benefits, with battery electric vehicles and range-extended EVs receiving a 3x volume derogation factor.

Kant additionally questioned whether the norms are ambitious enough on EV adoption. “We import almost 90 per cent of our oil. We are building battery and EV manufacturing capacity. Our fuel-efficiency rules should propel the industry toward that future, not give it room to delay,” he stated.

Kant pointed out that the norms target 11% electric cars by 2032, while EVs are already close to 8% of car sales in the current financial year. He additionally questioned the provision allowing the Bureau of Energy Efficiency (BEE) to sell compliance credits. “How can BEE sell credits? A regulator can’t be a player in the market it regulates,” he stated.

The automobile industry, that stated, has broadly welcomed the final framework, particularly its technology-neutral approach. Maruti Suzuki stated CAFE-III recognises multiple powertrain technologies and fuels, encouraging “multi-faceted R&D and innovation”. The firm additionally called the credit/debit mechanism an improvement over the existing CAFE-II framework.

JSW Motors CEO Ranjan Nayak described the framework as “progressive and forward-looking”, saying the norms recognise that India’s mobility transition will involve multiple powertrains. JSW Motors particularly welcomed the 3x volume derogation factor for BEVs and range-extended EVs and 2.5x for plug-in hybrids and eligible firm hybrids.

Mahindra & Mahindra additionally welcomed the framework, saying it strikes a balance between environmental requirements and what is achievable for the industry. Hyundai Motor India stated the norms provide a clear and predictable regulatory roadmap, while Tata Motors stated the continued recognition of zero-emission technologies reinforces the role of electrification in India’s long-term decarbonisation.

The CAFE-III framework additionally gives alternative fuels a role in meeting the fleet-level targets. E20 and elevated ethanol-blended petrol vehicles get an 8% Carbon Neutrality Factor, while flex-fuel ethanol vehicles receive a 22.3% factor. CNG vehicles get a 5% factor or the notified CBG blending percentage, whichever is elevated.

Dr C.K. Jain, president of the Grain Ethanol Manufacturers Association (GEMA), stated CAFE-III comes at an important point in India’s mobility transition, with the country having already established E20 blending. He stated the recognition of E20 and elevated ethanol blends, flex-fuel vehicles, hybrids and CNG gives manufacturers multiple pathways to improve efficiency and reduce fossil-fuel dependence.

“The 22.3% Carbon Neutrality Factor for flex-fuel ethanol vehicles could invite investments and innovations,” Jain stated, adding that the recognition of flex-fuel vehicles could help align automakers, fuel retailers and the biofuel industry around elevated ethanol blends and related vehicle technology.

The final framework thus gives automakers multiple compliance pathways — including EVs, hybrids, ethanol, CNG and fuel-efficiency technologies — while progressively tightening fleet-average efficiency requirements through FY32.