12. Green Mobility at a Crossroads: The CAFE-III Norms Debate

As India moves toward its Net Zero 2070 goals, the Ministry of Power and NITI Aayog are refining the third phase of Corporate Average Fuel Efficiency (CAFE-III) norms, set to take effect from April 1, 2027. A central point of contention in 2026 is the \'small car carve-out\'—a proposed relaxation for lightweight, entrylevel vehicles. While NITI Aayog advocates for promoting these cars to ensure affordability and lower absolute emissions, the industry remains split. Major players like Maruti Suzuki argue that small cars are naturally more efficient, while others like Tata Motors and Mahindra warn that exemptions could compromise safety standards and create an unlevel playing field. Summary of Key Developments • Stricter Emission Ceilings: CAFE-III mandates a significant reduction in fleet-average CO_{2} emissions to approximately 91.7 g/km (down from 113 g/km in CAFEII) for the period 2027–2032. • The \'Small Car\' Flashpoint: The draft originally proposed a 3 g/km CO_{2} \'deduction\' for petrol cars under 909 kg and 1,200 cc. However, as of February 2026, the government is considering \'moderating the slope\' of the target line rather than a flat exemption to balance industry concerns. • Transition to WLTP: From April 2027, India will adopt the Worldwide Harmonised Light Vehicle Test Procedure (WLTP), replacing the current MIDC. This shift ensures emission data more accurately reflects real-world driving conditions, making compliance tougher for older engine architectures. • NITI Aayog’s Decarbonization Roadmap: The think-tank’s 2026 report emphasizes that entry-level cars are critical for first-time buyers upgrading from two-wheelers. It suggests that CAFE norms should incentivize \'lightweighting\' and the use of sustainable biofuels. • Super-Credit Mechanism: To encourage the transition, the norms continue to offer \'super-credits\' for Electric Vehicles (EVs) and Strong Hybrids, where one EV sale is counted as multiple units to offset the higher emissions of a manufacturer’s SUV portfolio. • Penalty Framework: Non-compliance under the amended Energy Conservation Act carries heavy financial penalties, potentially reaching ₹50,000 per vehicle for significant fuel-efficiency shortfalls. Key Definitions • Corporate Average Fuel Efficiency (CAFE): A regulatory mechanism that limits the sales-weighted average CO_{2} emissions of an automaker\'s entire fleet, rather than testing individual vehicle models. • Slope (Cartesian Graph): In CAFE norms, this refers to the mathematical line that sets CO_{2} targets relative to vehicle weight. A \'flatter\' slope means heavier vehicles must work harder to comply, while a \'steeper\' slope benefits lighter cars.• WLTP (World Harmonised Light Vehicle Test Procedure): A global standard for determining the levels of pollutants, CO_2 emissions, and fuel consumption from passenger cars under realistic driving cycles. • Lighter-than-909 kg Segment: A specific regulatory category targeting entry-level hatchbacks that typically offer high fuel efficiency but operate on low profit margins. Constitutional & Legal Provisions • Article 48A (Directive Principles): Mandates the State to protect and improve the environment, providing the moral basis for stringent emission standards. • Energy Conservation Act, 2001 (Amended 2022): The primary legal instrument under which CAFE norms are notified and enforced by the Bureau of Energy Efficiency (BEE). • Central Motor Vehicles Rules (CMVR), 1989: Recently amended to notify the shift to WLTP testing cycles for BS6 vehicles from April 2027. • Seventh Schedule (Union List): Entry 29 (Airways, aircraft, and air navigation) and Entry 97 (Residuary powers) often overlap in environmental and energy regulation. Conclusion The CAFE-III norms represent a delicate balancing act between environmental integrity and social equity. While the government seeks to decarbonize the transport sector, it must avoid making personal mobility unaffordable for the common citizen. The resolution of the \'small car\' debate will determine whether India’s future roads are dominated by large, expensive electrified SUVs or a diverse mix of lightweight, fuel-efficient hatchbacks and hybrids. A \'sloped\' target approach seems to be the emerging consensus to ensure that all segments contribute to the green transition without sacrificing the viability of budget vehicles. UPSC Relevance • GS Paper II: Government policies and interventions; Statutory bodies (NITI Aayog, BEE). • GS Paper III: Environmental pollution and degradation; Infrastructure (Energy and Transport); Impact of liberalization on the economy (Auto sector reforms). • Prelims/Mains: Difference between BS-VI and CAFE norms; Significance of WLTP; National Mission for Enhanced Energy Efficiency (NMEEE).