India has scrapped a proposed exemption for small petrol cars under new fuel-efficiency rules after automakers argued it would unfairly benefit Maruti Suzuki, which dominates 95% of India's small-car market. The September draft had proposed leniency for vehicles weighing 909 kg or less, but the latest 41-page government document removes this carve-out.

Transport accounts for about 12% of India's energy use and is a major driver of petroleum imports and carbon emissions. Passenger vehicles make up nearly 90% of transport-related emissions. The revised Corporate Average Fuel Efficiency norms will apply from April 2027 for five years, pushing automakers toward electrification, compressed natural gas, and flex-fuel technologies.

The new rules introduce a substantially steeper reduction pathway for emissions and curb over-compensation for vehicle weight. They aim to level the playing field between light and heavy fleet manufacturers while delivering real-world efficiency gains. A credit system will reward companies selling more EVs and plug-in hybrids, with non-compliance drawing penalties of up to $550 per car. The revised plan targets average fleet emissions of about 100 grams/km by March 2032, potentially falling to 76 grams/km with electric models reaching 11% of total car sales.