India sets tougher fuel-efficiency rules for passenger vehicles

India’s government has notified new Corporate Average Fuel Economy, or CAFE-3, standards that will set fuel-efficiency and carbon-emission limits for passenger vehicles from April 1, 2027, to March 31, 2032. The rules cover new passenger vehicles manufactured or imported for sale in India, including hatchbacks, sedans, utility vehicles and multi-purpose vehicles carrying up to eight passengers besides the driver. The Power Ministry said the framework would give consumers more technology choices while requiring manufacturers to plan their production accordingly.

The final rules remove a concession proposed for petrol cars weighing less than 909 kilograms. They also flatten the target line, creating relatively softer requirements for lighter vehicles and stronger efficiency requirements for heavier ones. The reference weight rises from 1,082 kilograms under the current norms to 1,229 kilograms.

The fuel-consumption benchmark will tighten from 3.996 litres per 100 kilometres in 2027-28 to 3.3273 litres per 100 kilometres in 2031-32, an improvement of about 16.7% over the period. Targets will become progressively stricter each year. Manufacturers will receive “super credits” when producing battery-electric, range-extended electric, plug-in hybrid, strong hybrid and flex-fuel vehicles.

These volume multipliers will count such vehicles more favourably when companies calculate fleet-average emissions. The framework also introduces a credit-and-debit system. Companies exceeding their targets can carry credits forward, while those falling short can use past credits, trade with other automakers or buy credits through a Bureau of Energy Efficiency programme.

The government said the standards would encourage technologies including solar-reflective paint, advanced glazing and more efficient air-conditioning. It also described the rules as supporting India’s energy-security and sustainability objectives.