New CAFE 3 rules to support both flex fuel and EVs, says Nitin Gadkari

The move aims to reduce India’s crude oil imports, cut down on vehicular pollution, and boost the use of domestically produced ethanol.

The government is working on a new version of fuel efficiency regulations, known as CAFE 3 norms, that will encourage not just electric vehicles (EVs), but also flex fuel cars that run on ethanol blends, Union Transport Minister Nitin Gadkari said during an Economic Times Roundtable on Thursday.

The move aims to reduce India’s crude oil imports, cut down on vehicular pollution, and boost the use of domestically produced ethanol.

What are CAFE norms?

CAFE, or Corporate Average Fuel Efficiency norms, set limits on the average CO2 emissions of all passenger cars sold by a manufacturer in a year. These standards push carmakers to offer more fuel-efficient models. CAFE 2 norms are currently in place and apply through March 2027. The new version, CAFE 3, will kick in from April 2027.

Currently, the CAFE framework has been heavily tilted in favour of electric vehicles. But that will change.

“The old CAFE norms were electric-centric,” Gadkari said. “The new CAFE 3 norms will balance both electric and flexi-fuel engines.”
Flex fuel refers to petrol blended with ethanol. Indian pumps currently offer E20 fuel, petrol mixed with 20 percent ethanol.

Key meetings underway

A high-level meeting was held on Wednesday between officials from the Ministry of Road Transport and Highways, the Ministry of Power, and the Principal Scientific Adviser to finalise the CAFE 3 draft. Earlier this month, consultations were also held with industry players.

One of the key proposals under review is whether big and small cars should be treated differently under the new rules, a suggestion that has divided the industry.

But Gadkari made it clear that national priorities will take precedence over lobbying efforts, the ET report adds.

“Despite different lobbies working on it, we have to work in the interest of the country, keeping in mind pollution, cost, import, and benefits for agriculture,” he told Economic Times.

Why this matters

Under existing CAFE 2 norms, all passenger vehicles under 3,500 kg, including petrol, diesel, CNG, hybrids and EVs, must maintain an average CO2 emission of 113 grams per km. This is calculated across a company’s entire fleet, not for individual models.

But here’s the issue: ethanol has a lower calorific value than petrol, meaning more fuel gets burned to travel the same distance, and that can push emissions higher, even though it reduces oil dependency.

To fix that, Gadkari said the government is testing Russian technology that can increase the energy output of ethanol, making it as efficient as petrol. The long-term goal is to make 100 percent ethanol-powered cars a practical reality.

Euro VII and end-of-life vehicles
India is also gearing up for Euro VII-level emissions norms, Gadkari said, adding that initial resistance to the BS-VI rollout in 2020 was overcome, and India’s emission standards are now among the world’s toughest.

When asked about the ban on petrol and diesel vehicles beyond a certain age in NCR, Gadkari said the issue should be resolved legally, but converting old petrol or diesel vehicles to CNG is an economically smart move.

He added that the Delhi government has the legal power to restrict polluting vehicles if public health is at stake.

Currently, petrol vehicles older than 15 years and diesel vehicles older than 10 years are banned in the National Capital Region, as per a National Green Tribunal order upheld by the Supreme Court.