New CAFE norms out for passenger vehicles, targets tightened for FY28-FY32

The power ministry has notified the new Corporate Average Fuel Economy (CAFE) Norms for passenger vehicles, which will come into effect from April and remain applicable up to 31 March 2032.

The new CAFE framework will drive progressive improvements in fuel economy through year-on-year tightening of targets across all five years. The norms will apply to new passenger vehicles manufactured or imported for sale in India.

The fuel-consumption benchmark is tightened from 3.996 litres/100 km in FY28 to 3.3273 litres/100 km in FY32, making an improvement of around 16.7% in the period.

The revised target line has been flattened to provide a more balanced, weight sensitive approach, with relatively softer targets for lighter vehicles and greater fuel efficiency requirements for heavier vehicles, the ministry said in a statement.

The reference weight has been raised to 1,229 kg under the new norms from 1,082 kg under the existing, up around 13.6%, reflecting the evolving characteristics of the passenger vehicle fleet.

The new norms provide flexibility to manufacturers to adopt cleaner technologies, alternative fuels, and other innovative solutions.

The new CAFE framework promotes technological innovation in new technologies such as Solar reflective paints, advance glazing, high efficiency air-conditioning for improved fuel efficiency and India’s energy security and sustainability objectives.

The passenger vehicle segment accounts for a substantial share of India's transport energy demand and remains an important contributor to fossil-fuel consumption.

For the first time, the government has brought carbon neutrality factors to recognize the lower lifecycle emissions of ethanol, biofuels, and compressed biogas.

Similar to the proposed amendments under CAFE II, the norms introduce a credit and debit mechanism.

Manufacturers exceeding their targets will earn compliance credits that can be carried forward within the compliance period. Those falling short can meet their obligations by using carried-forward credits, entering voluntary pooling arrangements with other manufacturers, or purchasing compliance credits from the Bureau of Energy Efficiency.

Manufacturers with annual sales of less than 1,000 passenger vehicles shall continue to be exempt from the norms.