Following the new CAFE regulations, the automakers now will have to manufacture vehicles that are at least 30% fuel-efficient. The regulation also has some other modifications that will make the Indian made vehicles at par with the vehicles made elsewhere.
Automobile sales, electric or otherwise, have slackened in India recently and to boost the sales of EVs, the Indian Government has taken the step to update the Corporate Average Fuel Economy (CAFE) norm. As per this norm, the automakers will have to follow a set of regulations for producing vehicles in India.
The Indian government has asked automobile makers to make at least 2% to 3% of their cars electric every year. In addition, automakers, who have reached their average fuel consumption target, will have to indirectly invest in EVs. The government wants the automobile companies to manufacture more EVs and reduce the production of internal combustion engines.
However, to make every other major company take up the decision to produce more electric vehicles, the government needs to push those companies towards its own goal of achieving it. The World Economic Forum (WEF) released a report that showed that India has the potential to dominate the electric vehicle market worldwide.
In this regard, the Indian government is following in the footsteps of California as the state too used the norm to regulate fuel efficiency, which the car manufacturers have to follow. Thirteen states in the US - Connecticut, Delaware, Maine, Maryland, Massachusetts, New Jersey, New Mexico, New York, Oregon, Pennsylvania, Rhode Island, Vermont, Washington state - also follow CAFE.
Some private Indian automobile companies such as Maruti Suzuki, Toyota, Hyundai, and MG Motors are already in the business of manufacturing electric vehicles. However, it might take some time for the heavyweights, such as BMW and Mercedes Benz, to take part in that race owing to the development of the Indian EV ecosystem.