Penalties for non-compliance could reach hundreds of crores of rupees for large manufacturers, making the EV and hybrid credit mechanism a significant financial lever.

The draft includes super credits for electric and hybrid vehicles, with multipliers increasing for plug-in hybrids and flex-fuel hybrids in fleet calculations.

The system allows manufacturers to trade credits, giving carmakers additional flexibility in achieving fleet targets.

Super credits enable EVs and hybrids to count as multiple vehicles, enhancing their impact in meeting fleet emissions.

This softer CAFE framework aims to ease rules for the domestic auto industry with a gradual tightening path through the period.

Credit trading between manufacturers is permitted, providing flexibility to meet compliance obligations.

The draft marks a notable softening from the September 2025 version, signaling a recalibrated balance between industry ease and environmental targets.

A flatter compliance curve is introduced to balance industry ease with climate and energy goals.

The emission curve is recalibrated to a slope of 0.00158 in FY28 and 0.00131 by FY32, allowing slightly higher fuel consumption than earlier proposals.

This recalibration eases the pace of improvement, permitting marginally higher fuel consumption within the phased roadmap.

The government proposes a softer, phased tightening of CAFE norms for 2027–2032, moving away from a rigid target to a gradual compliance curve that eases short-term burden while advancing fuel efficiency.

The revised draft shifts to a phased, flatter tightening curve prepared by the Ministry of Power with the Bureau of Energy Efficiency, reducing benefits for heavier vehicles.