Why India’s new fuel-efficiency norms a missed opportunity | Explained

On September 30, 2026, the Indian government announced the third phase of fuel-efficiency norms for passenger vehicles, effective from April 1, 2027, until March 31, 2032. Under this framework, battery electric vehicles (BEVs) and range-extended electric vehicles will be counted as three vehicles in a manufacturer's fleet-efficiency calculations, while other cleaner technologies and biofuel-based vehicles receive specified credits.

Fleet-average fuel consumption is measured in petrol-equivalent litres per 100 km using the Modified Indian Driving Cycle (MIDC) and expressed in kWh for electric vehicles.

Each BEV and range-extended EV counts as three vehicles, while plug-in hybrids or flex-fuel strong hybrids count as 2.5 vehicles, strong hybrids count as 1.6 vehicles, and flex-fuel ethanol vehicles count as 1.1 vehicles. Cleaner technologies receive additional weight in calculating a manufacturer's fleet average, with credits that can be earned, carried forward and traded.

Declared CO₂ emissions are reduced based on the type of vehicle and fuel used, with ethanol and biofuel-powered vehicles receiving the highest reductions.

Automakers can also claim reductions of 1 g CO₂/km for each eligible fuel-efficiency technology, subject to an overall cap of 9 g CO₂/km. Critics argue that the new CAFE-3 norms fall short of driving a rapid transition to electric mobility, as they provide multiple compliance pathways that may allow manufacturers to meet their targets with existing technologies.

Industry experts believe that the norms have potential as powerful policy tools for accelerating electrification, but the multiple pathways may not drive the necessary shift in the industry. With the global trend moving towards increasingly stringent targets, the transition to Worldwide Harmonised Light Vehicles Test Procedure (WLTP) offers a timely opportunity to revisit the balance between established technologies and emerging solutions.