CAFE 3 norms: Maruti Suzuki, Hyundai, Tata Motors, M&M, Mercedes-Benz, others welcome new rules; ethanol gets boost

India’s automobile and biofuel industries have welcomed the notified CAFE 3 norms, with major automakers highlighting the regulatory clarity, technology-neutral approach and multiple compliance pathways under the new framework. The norms, effective from April 1, 2027, progressively tighten the fuel-efficiency requirement over five years, with the benchmark moving to 3.3273 litres/100 km by FY32, representing an improvement of about 16.7%.

Maruti Suzuki, Hyundai Motor India, Tata Motors, Mahindra & Mahindra and Mercedes-Benz India have backed the framework, while representatives of the ethanol and distillery industries have welcomed the stronger recognition for alternative fuels and flex-fuel technologies. The framework provides manufacturers with multiple pathways to meet fleet-level targets while encouraging investment in cleaner mobility technologies.

Maruti, Hyundai highlight technology flexibility

Rahul Bharti, Senior Executive Officer, Corporate Affairs, Maruti Suzuki, said CAFE regulation is a key policy instrument for India’s decarbonisation and energy-security journey. He welcomed CAFE III’s recognition of multiple powertrain technologies and fuels, adding that the credit-debit mechanism is an improvement over CAFE II. Maruti, he said, would continue its focus on absolute efficiency.

Hyundai Motor India MD & CEO Tarun Garg described CAFE III as a positive step, citing its clear long-term roadmap and technology-neutral approach. He highlighted the three-plus-two-year compliance block, credit trading, pooling and other flexible mechanisms. Garg also said Hyundai is committed to taking the share of greener vehicles, including EVs, hybrids and CNG models, beyond 50% over the next four to five years.

Tata Motors, M&M welcome compliance flexibility

Tata Motors Passenger Vehicles MD & CEO Shailesh Chandra called CAFE III an important step towards cleaner and more sustainable mobility. He welcomed the recognition of zero-emission technologies and the market-based compliance mechanism, saying the framework provides greater clarity for investment and innovation.

Mahindra & Mahindra President – Automotive Business Velusamy R welcomed the balance between environmental ambition, industry achievability and energy security. He also pointed to technology credits, cleaner-fuel benefits and super credits as important elements of the framework.

Mercedes-Benz India MD & CEO Santosh Iyer said the ambitious targets, practical compliance flexibility and recognition of BEVs and PHEVs would support investment in new-energy vehicles and advanced technologies.

SIAM President Shenu Agarwal said the framework provides a structured roadmap with ambitious annual targets while allowing manufacturers multiple technology pathways. He said greater regulatory predictability would support investment and innovation.

Ethanol, flex-fuel get stronger policy recognition

The notification has also been welcomed by the ethanol industry. ISMA Director General Deepak Ballani highlighted the recognition of ethanol and flex-fuel technologies, including an 8% Carbon Neutrality Factor for vehicles operating on E20 or higher ethanol blends and 22.3% for flex-fuel vehicles.

Vijendra Singh, President of the All India Distillers’ Association (AIDA), said the framework gives biofuels greater policy visibility and provides automakers with clarity to plan and invest in flex-fuel technologies.

“CAFE-III is not just an auto-sector regulation; it creates a formal policy bridge between India’s expanding ethanol ecosystem and the future of clean mobility,” he said, while stressing the need for vehicle availability, fuel infrastructure and consumer awareness.

Vikram Gulati, Country Head & Executive VP, Toyota Kirloskar Motor, welcomed the regulation’s “multi pathway approach”, saying BEVs, REEVs, PHEVs, SHEVs, FFVs and FFV-SHEVs had been recognised. He said the framework could help reduce dependence on imported fossil fuels by leveraging hybrids, electrification and indigenous biofuels such as ethanol.

The framework also expands recognised fuel-conservation technologies from four to 12 and provides compliance options including credit carry-forward, trading and buyout mechanisms.