Scooters, bikes strain oil imports. Fuel efficiency rules on cards.

The ministry of road transport and highways, the Bureau of Energy Efficiency (BEE), the Bureau of Indian Standards (BIS), and the government’s think-tank Niti Aayog have started initial discussions on a policy to regulate fuel efficiency of two-wheelers and nudge automakers towards producing cleaner vehicles, one person said, requesting anonymity.

“The discussion on two-wheeler fuel efficiency norms is in very early stages, and it may be taken up in due time after the government completes implementation of similar regulation for other vehicle segments,” the person said.

India is the world’s largest two-wheeler market by sales, with motorcycles and scooters making up the majority of new vehicles registered every year. About 19 million, or 76%, of the almost 25 million new vehicles registered in FY25, were two-wheelers. Of these, 17 million were petrol two-wheelers.

Nearly all of the country’s petrol is used by the country’s transport sector, which consumed a little over 40 million tonnes in FY25. This has increased the country’s crude oil import bill, with the world’s most populous country becoming the third-largest importer of crude oil after China and the US.

In stakeholder consultations on fuel efficiency norms for trucks in May and June this year, when the industry sought exemptions for smaller trucks weighing up to 3.5 tonnes, officials indicated that all vehicle segments would be covered under fuel efficiency regulations, two people said.

For all segments

“The officials were clear that all vehicle segments will be brought under regulation similar to CAFE (corporate average fuel efficiency) norms for passenger vehicles. That is why the N1 category of trucks, weighing up to 3.5 tonnes, were also included in the CSFC (constant speed fuel consumption) norms, and it indicated to the industry that even two-wheelers may face these norms,” said the third person cited earlier, also on condition of anonymity.

A draft notification for the norms for trucks came out in late July.

Email queries sent to the ministry, BEE, BIS, and Niti Aayog on 8 September remained unanswered.

Niti Aayog said in an August 2025 report on electric vehicles that there was need to move to mandates in public policy from a focus on just incentives, and that expanding CAFE norms to a wider segment of vehicles was an option. The think-tank recommended that the government take this course of action in the next one year.

CAFE norms cap carbon emissions by an automaker’s passenger vehicle fleets while constant speed fuel consumption (CSFC) norms place similar curbs on emissions by trucks. CAFE is aimed at improving the fuel efficiency of vehicles by lowering carbon dioxide (CO2) emissions. The next iteration of CAFE and CSFC norms will be implemented in April 2027.

Experts said India’s two-wheelers have historically been very fuel-efficient owing to consumer preferences for higher mileage.

“While the fuel consumption of these vehicles is low compared to other segments, the sheer volume of two-wheelers contributes immensely to the country’s crude oil imports,” said I V Rao, distinguished fellow, transport & urban governance at The Energy and Resources Institute.

Rao added that the mix of vehicle segments in other countries had determined fuel efficiency norms.

“Western economies have relied on cars for transport, and less on two-wheelers. That is why fuel efficiency standards have not made their way into those countries. But China, Taiwan and Indonesia, which have a heavy two-wheeler population, have introduced such regulation,” he said.

The tightening of fuel efficiency norms for motorcycles and scooters may push manufacturers towards adding more electric and biofuel vehicles as this would lower their total fleet emissions and improve fuel efficiency.

Super credits

CAFE norms for cars and CSFC norms for trucks provide super credits for zero-emission and low-emission powertrains. Low emission powertrains refer to hybrids and flex-fuel engines, which reduce carbon emissions significantly.

The sale of an electric car is counted as three units sold and no emissions added, thereby improving the fuel efficiency of the overall fleet. But the benefits for hybrids and flex-fuel vehicles are lower than those for zero-emission technology such as electric vehicles or hydrogen-based vehicles.

These norms have pushed automakers towards having more electric and hybrid vehicles in their mix as non-compliance results in hefty fines. Violations will result in a penalty of at least ₹10 lakh for every vehicle found emitting excessive carbon dioxide, under the Energy Conservation Act.

Automakers will have to pay extra penalties for the amount of CO2 emitted beyond the CAFE ceiling and breaching it by a higher margin will attract heftier penalties.

Historically, stringent fuel efficiency norms have increased costs of vehicles as manufacturers have to invest in new technology to comply with them. But with work on regulations for two-wheelers in the initial stages, it is too early to ascertain whether there will be a price rise. Also, most Indian automakers have already invested in cleaner powertrains including electric vehicles as well as some flex-fuel bikes.

Email queries to the country’s leading two-wheeler makers Hero MotoCorp Ltd, Bajaj Auto Ltd, and TVS Motor Co. Ltd, and Honda Motorcycle and Scooter India Pvt Ltd remained unanswered.