The Ministry of Power, on Wednesday, 30 September 2026, notified new Corporate Average Fuel Economy (CAFE) norms for passenger vehicles sold in India.
The rules will come into force on April 1 2027 and remain in effect until March 31 2032, with the government aiming for a 16.7% increase in the average fuel efficiency of its fleet over five years.
The new norms will apply to passenger vehicles which are manufactured or imported for sale in India. The framework will aim to reduce fuel consumption and provide automakers with the flexibility to implement more energy-efficient technologies in their vehicles, the Ministry said in a Press Information Bureau (PIB) release.
The new system will tighten the -consumption criteria. It will move from 3.996 litres per 100 km in 2027-28 to 3.3273 litres per 100 km in 2031-32, marking an improvement of around 16.7%.
The revised target structure will also place greater weight on the vehicle. The new approach will yield relatively easier targets for lighter vehicles and increased efficiency for heavier vehicles, the PIB release noted.
New CAFE will offer extra compliance advantages for cleaner vehicle technologies. Battery (BEVs), Range-Extended Electric Vehicles (REEVs), Plug-in Hybrid Electric Vehicles (PHEVs), Strong Hybrid Electric Vehicles (SHEVs) and Flex-Fuel Vehicles will receive volume derogation factors, or ‘super credits’, in fleet-average calculations.
The rules will also acknowledge the contribution of renewables and low-carbon fuels, such as ethanol-blended petrol, biofuels, and compressed biogas (CBG), by applying a carbon neutrality factor.
The government has increased the number of fuel-saving technologies recognised from 4 to 12. can receive a concession of 1 gram of CO₂ per km for each eligible technology, subject to a maximum concession of 9 grams of CO₂ per km. The framework also supports solar-reflective paints, new glazing technologies and high-efficiency air-conditioning technologies, PIB said.
Manufacturers will have the option to comply with CAFE requirements by completing a 2- or 3-year compliance block. Excess credits produced by a company may be banked by the company in allowed ‘blocks’, traded with other manufacturers, or utilised through eligible buyout methods approved by the Bureau of Energy Efficiency.
The new norms will be based on the Modified Indian Driving Cycle (MIDC) and the Worldwide Harmonised Light Vehicles Test Procedure (WLTP) for reporting purposes. Manufacturers who have sales of under 1,000 vehicles per year will continue to be exempt from the fleet-average requirements.
