Key Details
The notified Corporate Average Fuel Economy (CAFE) norms replace the current framework for new passenger vehicles manufactured or imported for sale in India from 1 April 2027.
Provision | New Framework |
|---|---|
Applicable period | 1 April 2027–31 March 2032 |
Stated fuel-consumption benchmark | 3.996 litres/100 km in 2027–28, declining to 3.3273 litres/100 km in 2031–32 |
Reference vehicle weight | 1,229 kg, up from 1,082 kg |
Recognised fuel-saving technologies | 12, up from four; eligible technologies receive a concession of 1 g CO₂/km each, capped at 9 g CO₂/km |
Low-volume exemption | Manufacturers selling fewer than 1,000 vehicles annually remain exempt from fleet-average obligations |
What Are Corporate Average Fuel Economy (CAFE) Norms?
CAFE norms set an average fuel-consumption obligation across a manufacturer’s eligible passenger-vehicle sales. They do not require every model to meet the same figure. A manufacturer’s applicable target also reflects the framework’s vehicle-weight calculation; the benchmark above should not be read as an identical limit for every company.
The Target Tightens Each Year
From 1 April 2027, India’s new CAFE Norms will set progressively tighter fleet-average fuel-consumption targets for makers of new passenger vehicles. The target applies across a manufacturer’s eligible sales, rather than requiring every car model to achieve the same fuel use.
The stated benchmark falls from 3.996 litres per 100 km in 2027–28 to 3.3273 litres per 100 km in 2031–32—a 16.7% reduction over the five-year period. The rules also revise how targets account for vehicle weight, making the calculation relatively softer for lighter vehicles and more demanding for heavier ones.
Manufacturers Have Several Compliance Routes
The rules recognise ethanol-blended petrol, biofuels and compressed biogas through a Carbon Neutrality Factor. Electric vehicles, specified hybrids, range-extended electric vehicles and flex-fuel vehicles receive additional weight in fleet-average calculations, known as “super credits.” The expanded list of fuel-saving technologies includes measures such as improved air-conditioning, glazing and solar-reflective paint.
Manufacturers may comply over specified two- or three-year blocks. Those exceeding their targets can generate credits; firms with a shortfall may use eligible credits, trade with other manufacturers or purchase credits through a Bureau of Energy Efficiency buyout mechanism. Reporting under both the Modified Indian Driving Cycle and the Worldwide Harmonized Light Vehicles Test Procedure will support the shift between testing methods.
Policy Relevance
The new norms give carmakers a five-year planning horizon while leaving room for different vehicle and fuel strategies. Their effect on fuel use will depend on the combined result of tighter targets and the allowances earned through alternative fuels, technologies and credits. For regulators, the important evidence will be verified fleet performance and credit use: these will show how manufacturers meet the standard, not just how demanding the benchmark looks on paper.
Relevant Question for Policy Stakeholders: How much of the required improvement will come from lower tested fuel consumption across manufacturers’ vehicle fleets, and how much from the framework’s fuel, technology and credit provisions?
Follow the Full Update Here: New Corporate Average Fuel Economy Norms Notified