Page 66 - Policy Economic Report - September 2026

POLICY AND ECONOMIC
OIL & GAS MARKET

litres/100 km in 2027–28 to 3.3273 litres/100 km in 2031–32, representing an improvement of around
16.7 per cent over the period.

The revised target line has also 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 reference weight has been increased from 1,082 kg under existing norms to 1,229 kg
under new CAFE norms, an increase of around 13.6 per cent, 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. The new CAFÉ framework is
consistent with and supports, rapid technological advancements, increasing availability of alternative
and renewable fuels, growing electrification and evolving global automotive technologies.

Explanatory Note

Corporate Average Fuel Economy (CAFE) Norms from 2027-28 to 2031-32: A Future-Ready and
Flexible Framework for India's Automotive Sector

The new CAFE Norms notified, will apply to passenger vehicles for the period from 1 April 2027 to 31
March 2032. They will replace the existing CAFE norms with effect from 1 April 2027 and will apply to
new passenger vehicles manufactured or imported for sale in India. The new framework provides
greater regulatory clarity and a stable policy framework for the automobile industry, while facilitating
technological innovation and supporting the continued evolution of India’s passenger vehicle sector
towards greater energy efficiency and lower fuel consumption.

CAFE framework marks an important milestone in India’s transition towards cleaner, more energy-
efficient and sustainable mobility. The new CAFE Norms have been finalised following extensive
consultations with automobile manufacturers, industry associations, academia and other
stakeholders, with the objective of providing a future-ready, technology-neutral and flexible
regulatory framework for the passenger vehicle sector.

The CAFE framework builds on the gains achieved under the existing regime while providing greater
technology choice, flexibility and regulatory certainty to the automotive industry.

The framework seeks to drive continuous improvements in fuel efficiency while enabling greater
adoption of cleaner technologies, alternative fuels and innovative solutions, thereby supporting

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