India Announces Stricter Fuel Economy Rules for Cars Starting 2027

India has notified new Corporate Average Fuel Economy rules that tighten the fuel-consumption benchmark for passenger vehicles by about 16.7 percent from April 2027 to March 2032. The limit drops from 3.996 litres per 100 kilometres for the 2027–28 period down to 3.3273 litres per 100 kilometres by the final year, covering new cars built or imported for sale in the country. The framework applies to a manufacturer's overall fleet average instead of requiring every individual car to hit the same mileage.

Fleet Rules

The Ministry of Power has flattened the target line and raised the reference weight parameter from 1,082 kilograms to 1,229 kilograms, which softens demands on lighter cars while placing higher efficiency requirements on heavier models. Battery electric, range-extended, plug-in hybrid, strong hybrid and flex-fuel vehicles will all earn super credits in fleet calculations. A new Carbon Neutrality Factor also rewards ethanol-blended petrol, biofuels and compressed biogas, keeping fuel-based routes open alongside electrification. Approved fuel-saving technologies rise from four to 12, covering items like solar-reflective paints, advanced glazing and high-efficiency air-conditioning systems. Each technology is worth 1 gram of CO2 per kilometre up to an overall cap of 9 grams per kilometre.

Compliance

Automakers can meet their obligations over specified two- or three-year compliance blocks, allowing them to bank surplus credits, trade with rivals or buy credits through the Bureau of Energy Efficiency. Results will be reported under both India's own drive cycle and the global light-vehicle test procedure. Manufacturers selling fewer than 1,000 units a year remain completely exempt from these rules.

Context

Corporate Average Fuel Economy norms are regulatory tools used by governments worldwide to push the auto industry toward lower carbon emissions and better fuel efficiency. By focusing on the average output of a carmaker's entire fleet rather than banning individual high-emission models outright, these rules give companies flexibility to balance traditional vehicles with newer green technologies over time.