The new fuel‑efficiency rules create a sharper annual tightening of fleet averages, pushing manufacturers to rethink their line‑ups. New targets start at 3.996 litres per 100 km in FY28 and slide to 3.3273 litres by FY32, which in CO2 terms means moving from 94.8 g/km down to 78.9 g/km for a reference fleet weight of 1,229 kg. Manufacturers selling fewer than 1,000 eligible units a year are exempt from the hard target but must still report their numbers, keeping the framework flexible for smaller players.
Electric vehicles receive a 3.0× multiplier – the highest bonus in the entire system. Plug‑in hybrids get 2.5×, regular hybrids 1.6×, and flex‑fuel ethanol cars 1.1×. Essentially, a firm can offset a heavy‑duty petrol model by selling more EVs, rather than retrofitting every variant to hit the target.
The draft had a 3 g/km CO2 break earmarked for sub‑four‑metre petrol hatchbacks, a relief that would have eased the burden on entry‑level models. That provision vanished from the final notification, meaning small‑car makers must now meet the same fleet‑wide math as their larger counterparts. No special carve‑out, no immediate price drop.
CNG and high‑ethanol vehicles don’t need to go electric to comply. An 8 % carbon‑neutrality factor applies to E20+ blends, 22.3 % to flex‑fuel ethanol vehicles, and 5 % to CNG – whichever is higher. This gives manufacturers a non‑EV route to stay within limits.
The new credit‑debit passbook lets firms trade or buy credits from the Bureau of Energy Efficiency. Prices climb from ₹2,500 to ₹4,500 per gram of CO2/km between FY28 and FY32, giving a market‑based incentive to push EV production.
For buyers, the concrete upside is higher dealer incentives and potentially lower purchase costs for EVs, while petrol hatchback prices are unlikely to see an immediate dip. Expect a flurry of new EV models over the next five years, but conventional small cars will keep their current efficiency expectations intact.