The Ministry of Power has issued the draft Corporate Average Fuel Economy (CAFE) 2027 norms for passenger vehicles, proposing a revised framework to improve fuel economy and promote cleaner vehicle technologies from FY 2027-28 to FY 2031-32.
The draft introduces annual fleet-average fuel consumption targets based on the weighted average unladen mass of vehicles sold by each manufacturer.
The proposed framework seeks to accelerate the adoption of fuel-efficient and cleaner vehicle technologies by introducing compliance incentives. It proposes carbon neutrality factors to recognise the contribution of renewable fuels during compliance assessment. Manufacturers will also receive compliance benefits for deploying approved fuel-saving technologies such as regenerative braking, start-stop systems and energy-efficient components. To provide greater flexibility, manufacturers that exceed their prescribed fuel economy targets will be allowed to carry forward or trade compliance credits, while those falling short may purchase credits from the Bureau of Energy Efficiency at prices ranging from Rs 2,500 per gCOâ‚‚ per km in FY2028 to Rs 4,500 per gCOâ‚‚ per km in FY2032. The draft also proposes reporting vehicle performance under both the Modified Indian Driving Cycle and the Worldwide Harmonized Light Vehicles Test Procedure, while manufacturers with annual sales below 1,000 vehicles will remain exempt from the fleet-average obligations.