# Carmakers Will Have to Deliver 25 km Per Litre or Face Steep Penalties Under New Rules

> The government is set to roll out CAFE-3 norms from 1 April 2027, requiring carmakers to achieve an average of 100 kilometres from 3.99 litres, or 25 km per litre, with heavy fines for those who miss the mark.

**Type:** article · **Category:** Auto · **Published:** 2026-07-16 · **Source:** TrendKia
**Canonical:** https://trendkia.com/en/auto/aba-hara-litara-men-25-kilomitara-dena-jaruri-varana-kara-knpaniyon-ki-jeba-para-paregi-bhari-mara-8161 · **Language:** English
**Tags:** CAFE norms, car mileage, fuel economy norms, electric vehicles, carmaker penalty, biofuel credit, CAFE-3

Amid the growing noise over falling car mileage, the government has decided to push its fuel-saving norms a step further. CAFE-3 will come into force from 1 April 2027. CAFE stands for Corporate Average Fuel Economy Norms. At present the country runs on CAFE-2, which stays valid until 31 March 2026. The whole exercise is aimed at increasing the number of vehicles on the market that cover more distance while burning less fuel. Under the new norms, companies will have to build cars that travel at least 100 kilometres on just 3.99 litres. In plain terms, that works out to a mileage of 25 kilometres per litre.

## Applied to the whole fleet, not a single car
One point is worth understanding clearly here. This benchmark does not apply separately to any single vehicle. A car manufacturer has to show this figure as the combined average mileage of all its cars. So even if one of a company's cars returns just 15 kilometres per litre, that is acceptable, provided another car from the same company delivers 30 kilometres or more. In fact, the rule does not look at how efficient any individual car is. The government simply asks the company whether the overall average mileage of every car it sold during the year was better than a fixed limit.

## Rules to tighten further in 2031-32
After CAFE-3, the government plans to squeeze harder. The norms will be made stricter in 2031-32. By then, a car company's average mileage will need to be 100 kilometres from 3.32 litres. Any company that fails to meet this benchmark will be slapped with a hefty penalty. This is precisely why a company selling fuel-guzzling vehicles will be haunted by the fear of fines. As a result, companies are being forced to bring higher-mileage or electric cars into the market.

## A clear edge for EVs and biofuels
The government has invited feedback on this draft from stakeholders, which include both the general public and car companies. Everyone can submit their views by 6 August 2026. Companies are asking that the government give them some discount or credit. The government is indeed doing that, but the bigger relief is going to firms that make electric vehicles. Companies building electric, flex-fuel or hybrid cars will be handed a super credit score, which can lift their average score. On top of that, for the first time, vehicles running on ethanol, bio-gas (CBG) and biofuel will earn extra points, known as carbon neutrality factors, for cutting pollution. Anyone wishing to send a suggestion on the matter can write to saket-upsc[at]gov[dot]in, or to the Under Secretary, Energy Conservation, R. No-6424, Hall No-4, 6th floor, GPOA-3 Africa Avenue, Netaji Nagar, New Delhi.

## Government to earn by selling credits too
Suppose a company cannot meet its set target. It can then buy that target from another company. And it is not only rival companies that can sell, the government itself will earn money by selling credits. In the first year, one credit has been priced at 2,500 rupees, and this will keep rising by 500 rupees every year. If a company neither follows the rules nor buys credits, it will be hit with a heavy fine. However, small car companies that sell fewer than 1,000 cars a year in India have been kept out of these strict norms.

## What this means for you
- **For car buyers:** In the coming years companies will roll out more high-mileage, hybrid and electric vehicles, widening the choice of fuel-efficient options over thirsty petrol and diesel cars.
- **For those with feedback:** The general public can send their views on the draft to the given address or email until 6 August 2026.
- **On your wallet:** The credit and penalty system can raise costs for carmakers, which may eventually show up in vehicle prices.

## Questions & Answers

### 1. When will the CAFE-3 norms take effect?
The CAFE-3 norms will come into force from 1 April 2027.

### 2. What mileage will carmakers have to deliver under the new norms?
Companies will have to deliver an average of at least 100 kilometres from 3.99 litres, which works out to 25 kilometres per litre.

### 3. Will this rule apply to every single car?
No, it applies to the combined average mileage of all of a company's cars, not to any single vehicle.

### 4. What does CAFE stand for?
CAFE stands for Corporate Average Fuel Economy Norms.

### 5. How much stricter will the rules become in 2031-32?
By then, a car company's average mileage must be 100 kilometres from 3.32 litres, failing which a heavy penalty will apply.

### 6. How much does one credit cost?
In the first year one credit is priced at 2,500 rupees, and this rises by 500 rupees every year.

### 7. Which companies are exempt from these rules?
Small car companies that sell fewer than 1,000 cars a year in India have been kept out of these strict norms.

### 8. What is the last date to submit feedback?
Stakeholders and the general public can submit their views on the draft until 6 August 2026.

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