New Delhi: The proposal for India’s new car fuel efficiency norms has reached the Prime Minister’s Office (PMO) after stakeholder consultations, according to Union minister HD Kumaraswamy.
“The Union power ministry held a meeting with stakeholders, and after the meeting, they have sent the proposal to the PMO,” Kumaraswamy, who is the Union heavy industries and steel minister, said at an event organized by industry lobby Ficci.
The ministries of road transport and highways, heavy industries, and power have worked on the third iteration of the corporate average fuel efficiency (CAFE-3) norms, which will come into force in April 2027, and guide carmakers’ strategy in the world’s third-largest automobile market by sales.
CAFE norms are essentially a ceiling on a carmaker’s total fleet emissions, nudging them to manufacture 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 that blend biofuels like ethanol with petrol.
These norms have divided the auto industry–one faction seeks incentives for smaller, more lightweight cars, and the other is against any benefits based on car weight. Mint reported earlier that automakers may face compliance issues with CAFE-3 as the time between notification and enforcement is less than in previous iterations.
India’s CAFE norms need to be built for future technologies, and not for bridge technologies such as hybrids, former NITI Aayog CEO Amitabh Kant said at the Ficci event.
When asked about the government’s view on bridge technologies, Kumaraswamy told mint that it will do everything needed to encourage EV adoption.
EV adoption
India’s electric car adoption reached 4% in 2025, a February 2026 CII-Kearney report said. India’s EV market is poised for growth to approximately $110 billion by 2029, from about $55 billion in 2025, according to market research firm Mordor Intelligence.
Kumaraswamy also said India’s EV sector will benefit from multiple free-trade agreements (FTAs), including those with the European Union, the UK, Australia, the UAE and others, as these deals provide new export destinations.
“As our manufacturing depth strengthens, so does our export potential. Over the past decade, automotive component exports have nearly doubled, rising from about USD 8 billion to USD 16.9 billion, reflecting India’s deepening integration into global value chains and its growing credibility as a manufacturing hub,” said Kumaraswamy.
This comes at a time when India is de-risking its critical supply chains, especially in the wake of a rare earth magnet crunch that left manufacturers worried. These magnets are essential in key sectors such as defence, electronics, automobiles, and renewable energy.
To prevent any single nation from using its dominance over crucial parts of the global supply chain, India decided to make its own magnets with government support.
In December, the government notified the Scheme to Promote Manufacturing of Sintered Rare Earth Permanent Magnets (REPM), a ₹7,280 crore package to support the setting up of five manufacturing plants. Kumaraswamy said that securing critical minerals is essential for long-term competitiveness.
