India's Government Initiates Development of Fuel Efficiency Norms for Two-Wheelers

The Indian government is embarking on an ambitious initiative to establish fuel efficiency standards for its vast two-wheeler market. This move follows recent tightening of regulations for larger vehicles, including cars and trucks, aimed at curbing crude oil imports and achieving net-zero carbon emissions by 2070. Key stakeholders, including the Ministry of Road Transport and Highways, the Bureau of Energy Efficiency, and NITI Aayog, have begun preliminary discussions on shaping this policy, which seeks to encourage automakers to produce cleaner vehicles.

India holds the distinction of being the world's largest market for two-wheelers, with motorcycles and scooters making up a significant majority of new vehicle registrations—approximately 76% of the nearly 25 million new vehicles registered in fiscal year 2025 were two-wheelers, predominantly petrol-powered. This heavy reliance on petrol has intensified the country's crude oil import bill, positioning India as the third-largest importer of crude oil globally, trailing only China and the United States.

During stakeholder consultations on fuel efficiency regulations for trucks earlier this year, officials indicated a comprehensive approach would be adopted, extending regulations to all vehicle categories, including two-wheelers. This approach mirrors the Corporate Average Fuel Economy (CAFE) standards already in place for passenger vehicles and suggests a concerted effort to enhance overall transport efficiency.

Experts point out that while the fuel consumption of two-wheelers is relatively low compared to other vehicle segments, their sheer volume significantly impacts crude oil imports. Historical consumer preferences in India have favored fuel-efficient models, but as the government looks to tighten regulations, manufacturers may be compelled to integrate more electric and biofuel vehicles into their offerings. These changes would not only lower fleet emissions but also improve compliance with impending standards.

NITI Aayog has urged a transition from incentivizing electric vehicles to implementing mandates, recommending that the government expand CAFE norms to encompass a broader array of vehicles within the next year. The upcoming revisions to these norms, set to take effect in April 2027, promise to impose stricter emissions caps, compelling automakers to adapt swiftly or face substantial penalties for non-compliance.

While the historical precedent of stringent fuel efficiency norms has often led to increased vehicle costs due to necessary technological investments, the current discussions surrounding two-wheeler regulations remain in their infancy. It is too soon to determine whether this will result in price hikes. Notably, many Indian automakers are already investing in cleaner technologies, including electric and flex-fuel options, which could ease the transition as regulatory frameworks evolve.