CAFE III is notified: from April 2027 an electric car counts three times
By Nikhil Yelligetti · Thursday, 1 October 2026 at 8:30 pm · 4 min read · 0 views
The power ministry has notified CAFE III for passenger vehicles made or imported from 1 April 2027 to 31 March 2032. Battery electric cars get a 3x credit. It does not change the price you pay this month.
The Ministry of Power has notified the final CAFE III fuel-efficiency rules. They apply to M1 passenger vehicles manufactured or imported in India from 1 April 2027 to 31 March 2032. Compliance is a sales-weighted average for each manufacturer, not a pass-fail sticker on one car in a Mumbai showroom.
2020 Tata Nexon EV in India. Photo: DriveSpark, CC BY 3.0, via Wikimedia Commons. CAFE III credits start in April 2027. They do not change this month's on-road price.
Battery-electric and range-extender electric vehicles get a multiplier of 3. Plug-in hybrids and flex-fuel strong hybrids get 2.5. Strong hybrids get 1.6. Flex-fuel ethanol vehicles get 1.1. Cars that run on E20 or a higher ethanol blend, including strong and plug-in hybrids, also get an 8% carbon-neutrality factor on tailpipe CO2.
Does this change a car you buy in October 2026?
No. The credit arithmetic starts in April 2027. What it changes is how a manufacturer balances a thirsty model against an electric one when the new targets bite. Makers who beat their target earn credits. Makers who miss it accumulate debits. Surplus credits can be traded, or bought from the Bureau of Energy Efficiency. That official price is set at ₹2,500 per g CO2/km in FY2028 and ₹4,500 in FY2032.
From 1 April 2027, makers must also declare CO2 on both the current Indian test cycle and WLTP. The conversion factor between the two is not notified yet, so a 2027 brochure comparison is not ready today.
The outline is the notification as reported on 1 October. Nothing in it replaces a PUC, an insurance policy or a service visit. Those stay on the rest of this desk.