Why India’s new fuel-efficiency norms a missed opportunity | Explained

The Story So Far: On September 30, 2026, the Centre notified the third phase of carbon emission norms for passenger vehicles, effective from April 1, 2027 to March 31, 2032. Under the framework, each battery electric vehicle will count as three vehicles toward a carmaker’s fleet-efficiency calculation, while other cleaner technologies and biofuel-based vehicles will receive specified credits.

While there is an industry-wide consensus to the norms, the multiple compliance pathways in the final framework may fall short of driving Indian manufacturers’ to meet their EV commitments.

What is CAFE-3 carbon emission framework for passenger vehicles?

The government has notified the third phase of Corporate Average Fuel Economy (CAFE-3) norms for passenger vehicles, which will come into effect from April 1, 2027 and remain in force until March 31, 2032.

The norms progressively tighten the fleet fuel-consumption benchmark from 3.996 litres per 100 km in 2027-28 to 3.3273 litres per 100 km in 2031-32, an improvement of about 16.7% over five years. They will apply to new passenger vehicles manufactured or imported for sale in India.

CAFE-3 uses 1,229 kg as the reference vehicle weight. The earlier concession for small cars weighing up to 909 kg has been removed.

Fleet-average fuel consumption will be calculated using the Modified Indian Driving Cycle (MIDC) and expressed in petrol-equivalent litres per 100 km. The norms use notified conversion factors to calculate petrol-equivalent fuel consumption for diesel, CNG, LPG and electric vehicles. For EVs, energy consumption is measured in kWh per 100 km.

Manufacturers can earn, carry forward and trade CAFE credits during a compliance block. Deficits can also be offset by purchasing credits from the Bureau of Energy Efficiency, subject to the prescribed rules.

What are CAFE-3’s proposals for alternative technologies?

CAFE-3 gives additional weight to cleaner technologies in calculating a manufacturer’s fleet average. Each battery electric vehicle (BEV) and range-extended EV will count as three vehicles, while each plug-in hybrid or flex-fuel strong hybrid will count as 2.5 vehicles. Strong hybrids will count as 1.6 vehicles and flex-fuel ethanol vehicles as 1.1 vehicles.