New CAFE Norms Target 16.7% Fuel Efficiency Gain

• New CAFE norms target 16.7% fuel-efficiency improvement by 2031-32.
• Norms take effect from April 1, 2027, for new passenger vehicles.
• EVs, hybrids, flex-fuel vehicles and cleaner fuels receive incentives.
• Fuel-saving technologies recognised under the framework expand from 4 to 12.

GG News Bureau
New Delhi, 30th Sept: The Ministry of Power has notified new Corporate Average Fuel Economy (CAFE) Norms for passenger vehicles, targeting a more than 16 per cent improvement in fuel efficiency over five years.

The new norms will come into effect from April 1, 2027, and remain applicable until March 31, 2032. They will apply to new passenger vehicles manufactured or imported for sale in India.

The revised framework will progressively tighten fuel-efficiency targets each year. The fuel-consumption benchmark will decline from 3.996 litres per 100 km in 2027-28 to 3.3273 litres per 100 km in 2031-32, representing an improvement of around 16.7 per cent over the five-year period.

Weight-sensitive targets introduced
The revised CAFE framework has flattened the target line to adopt a more balanced, weight-sensitive approach.

Under the new framework, relatively lighter vehicles will face comparatively softer targets, while heavier vehicles will be subject to greater fuel-efficiency requirements.

The reference weight has been increased from 1,082 kg under the existing norms to 1,229 kg, representing an increase of around 13.6 per cent.

Flexibility for cleaner technologies
The new framework provides manufacturers with flexibility to adopt cleaner technologies, alternative fuels and other innovative solutions.

It recognises technological innovations such as solar-reflective paints, advanced glazing and high-efficiency air-conditioning systems as potential contributors to improved vehicle efficiency.

The government said the framework is intended to support India’s energy security and sustainability objectives while allowing the passenger vehicle industry greater choice in determining technology pathways.

Renewable fuels get recognition
The new CAFE framework introduces a Carbon Neutrality Factor (CNF) to recognise the contribution of renewable and low-carbon fuels, including ethanol-blended petrol, biofuels and compressed biogas (CBG).

This provides manufacturers with an additional route to improve fleet-level CAFE performance alongside vehicle efficiency improvements and electrification.

The framework also expands the list of recognised fuel-conservation technologies from four to 12.

Manufacturers can receive a concession of 1 g CO₂/km for each eligible technology, subject to a maximum concession of 9.0 g CO₂/km.

Super credits for EVs and advanced vehicles
The norms provide volume derogation factors, or “super credits,” for several cleaner and advanced vehicle technologies.

These include Battery Electric Vehicles (BEVs), Range-Extended Electric Vehicles (REEVs), Plug-in Hybrid Electric Vehicles (PHEVs), Strong Hybrid Electric Vehicles (SHEVs) and Flex-Fuel Vehicles.

The mechanism is intended to encourage manufacturers to accelerate the deployment and market penetration of cleaner vehicle technologies.

Manufacturers get compliance flexibility
To facilitate compliance, manufacturers can meet their obligations through specified two-year and three-year compliance blocks under the framework.

Manufacturers that exceed their prescribed targets will be able to generate credits, which can be carried forward within specified compliance blocks.

Manufacturers facing a compliance gap can use eligible carry-forward provisions, exchange or trade credits with other manufacturers, or purchase credits through the buyout mechanism administered by the Bureau of Energy Efficiency.

The provisions are intended to provide manufacturers greater flexibility while managing changes in product portfolios and technology adoption.

MIDC and WLTP testing
The new framework provides for reporting under both the Modified Indian Driving Cycle (MIDC) and the Worldwide Harmonized Light Vehicles Test Procedure (WLTP).

According to the Ministry of Power, the dual approach will facilitate India’s gradual transition towards globally harmonised vehicle-testing practices.

Manufacturers with annual sales of below 1,000 units will remain exempt from fleet-average obligations under the new framework.

CAFE framework follows stakeholder consultations
The new norms were finalised following consultations with automobile manufacturers, industry associations, academia and other stakeholders.

The government said the framework builds on the gains achieved under the existing CAFE regime while providing greater technology choice, flexibility and regulatory certainty to the automotive industry.

The passenger vehicle sector accounts for a substantial share of India’s transport energy demand and remains an important contributor to fossil-fuel consumption. The new framework is intended to support the increasing adoption of alternative and renewable fuels, electrification and evolving automotive technologies.