The government has notified new Corporate Average Fuel Economy (CAFE) norms for passenger vehicles, replacing the existing framework. The rules will apply from 1 April 2027 and remain in force until 31 March 2032, covering new passenger vehicles manufactured or imported for sale in India.

The CAFE system sets a benchmark for the average fuel consumption and efficiency of all passenger vehicles produced by an individual vehicle company. Under the notified framework, manufacturers will be assessed on the combined fuel performance of the passenger vehicles they make for the Indian market.

According to the Ministry of Energy, the fuel efficiency targets will become stricter each year during the period covered by the rules. The standard for fuel consumption will be reduced from 3.9 litres per 100 kilometres in 2027-28 to 3.32 litres per 100 kilometres in 2031-32.

The change represents an improvement of more than 16 per cent in fuel efficiency over the period. The annual tightening of the benchmark is intended to reduce the average fuel consumption of passenger vehicles covered by the regulations.

The government said the new norms would provide the automobile industry with greater regulatory clarity and a stable policy framework. The rules are also intended to support technological innovation, improve energy efficiency and encourage lower fuel consumption across India’s passenger vehicle sector.

The norms will therefore guide the industry through a defined five-year implementation period, with progressively higher efficiency requirements. Their application to both domestically manufactured and imported vehicles means that new passenger vehicles offered for sale in India will be covered by the same regulatory framework.