Compressed natural gas (CNG) vehicles are projected to overtake petrol cars in the passenger vehicle market by FY32, on the back of tighter emission norms and lower running costs.
A recent presentation by the Bureau of Energy Efficiency (BEE) shows CNG adoption doubling by FY32, while petrol’s share could decline sharply. CNG is projected to account for 35% of passenger vehicle sales by FY32, compared with petrol at 30.7%. This marks a reversal from FY25, when petrol held 58% of the market and CNG 18%.
What has been driving CNG growth so far?
So far, CNG growth has been driven largely by consumers seeking higher fuel efficiency and lower operating costs. Going ahead, policy and regulatory factors are expected to play a larger role.
The Corporate Average Fuel Efficiency (CAFE-3) norms, which will regulate fleet-average carbon dioxide emissions from 2027 to 2032, require manufacturers to progressively cut emissions or face financial penalties.
Under the framework, fleet-average emissions must decline to 77.08 grams of CO₂ per kilometre by FY32. Standard CNG vehicles emit 97.59 g/km, compared with 119.82 g/km for petrol and 150.18 g/km for diesel. Non-compliance can attract penalties ranging from Rs 25,000 to Rs 50,000 per vehicle, along with a base fine of Rs 10 lakh.
The lower emission profile of CNG vehicles provides manufacturers a relatively cost-effective route to manage fleet averages.
A carbon neutral factor
The framework also introduces a Carbon Neutral Factor that offers additional benefits for vehicles running on compressed bio-gas blends. With this adjustment, effective emissions for a CNG vehicle fall to 92.71 g/km. By comparison, petrol vehicles running on higher ethanol blends receive an 8% factor, reducing effective emissions to 110.25 g/km. The differential provides a measurable compliance advantage for CNG.
A senior BEE official said CNG offers “one of the most practical and scalable pathways” to meet CAFE-3 targets, while electrification remains the longer-term objective. Electric vehicles will earn supercredits under the framework, meaning they are weighted more heavily in fleet calculations.
Industry data show that over 35 factory-fitted CNG models are currently available, spanning hatchbacks, sedans and sport-utility vehicles. Maruti Suzuki leads the segment, followed by Tata Motors, Hyundai Motor India and Toyota Kirloskar Motor. Analysts say expansion of city gas distribution networks into Tier-II and Tier-III markets is supporting wider adoption, positioning CNG as a transition fuel as manufacturers scale up electric and hybrid portfolios.