Fuel economy standards for light-duty vehicles

Fuel economy regulations for vehicles with a gross vehicle weight of less than 3.5t were adopted by the Ministry of Power in 2015 as fleet sales requirement for manufacturers (Corporate Average Fuel Economy or CAFE standards). The regulation was implemented in a two-phased approach: In 2017 (Phase I), a manufacturers sold vehicle fleet was to meet the target of 130 gCO2/km; while for Phase II (which took effect in April 2022) the target was tightened to 113 gCO2/km. 
 
 The CAFE standards are set under the Modified Indian Driving Cycle which is a modified version of the EU's New European Driving Cycle, tailored to Indian driving conditions. They allow for flexibility mechanisms to promote sales of low-carbon vehicles. As of 2022, regulations do not specify a financial penalty in the case of a manufacturer’s non-compliance with CAFE standards but the adoption of the Energy Conservation (Amendment) Bill has laid the foundation for the implementation of such a penalty. 

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