EVs may lose zero-emission tag; PMO steps in
The review follows consultations within the government and representations from industry stakeholders regarding how EVs should be accounted for in fleet emission calculations.
- Feb 24, 2026,
- Updated Feb 24, 2026 9:19 AM IST
The Prime Minister’s Office (PMO) is understood to be examining a proposal related to the treatment of electric vehicles (EVs) under the upcoming Corporate Average Fuel Efficiency (CAFE) III norms, sources told Business Today. The review follows consultations within the government and representations from industry stakeholders regarding how EVs should be accounted for in fleet emission calculations.
At issue is whether EVs should continue to be treated as zero-emission vehicles for regulatory compliance purposes or whether their electricity consumption should be factored into the calculation based on grid emission intensity. The draft framework prepared by the Bureau of Energy Efficiency (BEE) reportedly explores a methodology that links vehicle energy consumption to India’s power generation mix, moving beyond tailpipe-only measurement.
“Discussions are ongoing, and no final view has been taken,” a government source said. “The objective is to ensure that the compliance framework remains robust while also aligned with India’s broader mobility and climate goals.”
Currently, EVs are treated as zero-emission vehicles in CAFE calculations, which allows manufacturers to offset emissions from conventional internal combustion engine models. Any modification in accounting methodology would have implications for fleet compliance strategies, though officials emphasised that the broader push towards electrification remains unchanged.
“The government’s commitment to EV adoption and localisation continues,” another official familiar with the matter said. “The deliberations are about refining the framework, not reversing direction.”
Industry executives indicated that clarity on the final approach would help companies plan product portfolios and compliance pathways more effectively. “Automakers need regulatory visibility given long product cycles,” a senior industry representative told Business Today. “A phased or calibrated approach, if adopted, would provide predictability.”
The matter has gained attention, given its intersection with manufacturing incentives and energy transition planning. Agencies such as the Ministry of Heavy Industries and NITI Aayog have been central to promoting electric mobility and domestic production, while industry body Society of Indian Automobile Manufacturers (SIAM) is understood to have participated in consultations.
Sources indicated that various options are being examined, including maintaining the current treatment, adopting a revised accounting formula, or introducing transitional provisions. A final decision is expected after inter-ministerial discussions, along with stakeholders, conclude.
The Prime Minister’s Office (PMO) is understood to be examining a proposal related to the treatment of electric vehicles (EVs) under the upcoming Corporate Average Fuel Efficiency (CAFE) III norms, sources told Business Today. The review follows consultations within the government and representations from industry stakeholders regarding how EVs should be accounted for in fleet emission calculations.
At issue is whether EVs should continue to be treated as zero-emission vehicles for regulatory compliance purposes or whether their electricity consumption should be factored into the calculation based on grid emission intensity. The draft framework prepared by the Bureau of Energy Efficiency (BEE) reportedly explores a methodology that links vehicle energy consumption to India’s power generation mix, moving beyond tailpipe-only measurement.
“Discussions are ongoing, and no final view has been taken,” a government source said. “The objective is to ensure that the compliance framework remains robust while also aligned with India’s broader mobility and climate goals.”
Currently, EVs are treated as zero-emission vehicles in CAFE calculations, which allows manufacturers to offset emissions from conventional internal combustion engine models. Any modification in accounting methodology would have implications for fleet compliance strategies, though officials emphasised that the broader push towards electrification remains unchanged.
“The government’s commitment to EV adoption and localisation continues,” another official familiar with the matter said. “The deliberations are about refining the framework, not reversing direction.”
Industry executives indicated that clarity on the final approach would help companies plan product portfolios and compliance pathways more effectively. “Automakers need regulatory visibility given long product cycles,” a senior industry representative told Business Today. “A phased or calibrated approach, if adopted, would provide predictability.”
The matter has gained attention, given its intersection with manufacturing incentives and energy transition planning. Agencies such as the Ministry of Heavy Industries and NITI Aayog have been central to promoting electric mobility and domestic production, while industry body Society of Indian Automobile Manufacturers (SIAM) is understood to have participated in consultations.
Sources indicated that various options are being examined, including maintaining the current treatment, adopting a revised accounting formula, or introducing transitional provisions. A final decision is expected after inter-ministerial discussions, along with stakeholders, conclude.