Govt proposes new fuel economy norms for cars from April 1, 2027
New Delhi, July 16
The Ministry of Power on Thursday circulated the draft Corporate Average Fuel Economy 2027 Norms for stakeholder consultation, which propose a fresh five-year fuel efficiency regime for passenger vehicles, beginning from April 1, 2027.
The draft norms apply to M1 category vehicles, a classification that covers passenger cars carrying up to eight people besides the driver, which includes all hatchbacks, sedans and SUVs sold for personal use. The category excludes commercial goods carriers and buses, according to an official statement.
The existing CAFE-II norms are likely to lapse on March 31, 2027. Compliance under CAFE-III will be assessed in two phases, the first covering three years and the second the remaining two, with fuel efficiency targets progressing to more stringent levels through each passing year.
The framework, overseen by the Bureau of Energy Efficiency under the Ministry of Power, aims to bring down average fleet emissions from current levels to a significantly lower threshold by FY32, according to earlier drafts reported in the media.
Compliance credits have been priced at Rs 2,500 each, rising by Rs 500 every year through the period, with unused credits expiring once the compliance period ends. Automakers that fail to meet targets could face penalties, though the detailed amounts have not been mentioned. Manufacturers selling fewer than 1,000 vehicles annually will remain exempt.
Industry has differed in its response to earlier versions of the draft. The Society of Indian Automobile Manufacturers (SIAM) has backed the proposal as balanced, while some carmakers have pushed for relief on small petrol cars and others have opposed differentiated treatment for that segment.
The ministry has invited suggestions from stakeholders and the public. Feedback can be sent to the Under Secretary, Energy Conservation, at the ministry's New Delhi office, or can be emailed.
The last date for submissions is August 6, 2026. The draft norms will also be uploaded on the websites of the Ministry of Power and the Bureau of Energy Efficiency shortly, the statement said.
M1 vehicles are subject to stringent fuel efficiency and emission targets under Corporate Average Fuel Economy (CAFE) norms, which are regularly updated to reduce greenhouse gases.
— IANS
Reader Comments
Another set of norms that will increase car prices! 😤 We already have ₹6 per litre road cess added to petrol in many states. The CAFE targets are ambitious but why penalize automakers with ₹2500 per credit? This cost will be passed to customers. India needs affordable personal transport, not just eco-friendly targets that benefit the elite who can afford electric cars.
This is a progressive step but India needs to learn from China's approach. China mandated 20% EV sales by 2025 and achieved it with aggressive subsidies and infrastructure. India's CAFE norms are piecemeal - petrol cars will still dominate until we have widespread charging stations. Without that, it's just paperwork.
The two-phase implementation makes sense - give automakers time to retool. But the ₹500 annual increase in credit price is steep! I work in auto component industry and know how expensive R&D is for compact cars. Small car owners are usually first-time buyers on tight budgets. Hope the final norms have some flexibility for the entry-level segment.
As someone who drives an old petrol SUV, I'm worried! These norms might force manufacturers to phase out affordable SUVs like the Thar or Scorpio. India's roads need rugged vehicles, not just fuel-sipping city cars. The government should subsidize hybrid technology instead of just penalizing - that would help both environment and car buyers.
Good to see SIAM supporting this. But why exclude commercial vehicles? Buses and trucks are the biggest polluters in Indian cities! 🤷♂️ Also, the August
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