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Informist, Monday, Apr. 20, 2026

NEW DELHI – The Indian Sugar & Bio-energy Manufacturers Association has urged the government to provide stronger incentives for flex-fuel vehicles under the draft Corporate Average Fuel Efficiency (CAFE-III) norms to boost the use of ethanol as a biofuel. Once the draft is finalised and notified, it will be a critical regulation determining the pace and scale of flex-fuel vehicles, which can run on higher ethanol blends such as E85 or E100, ISMA said. 

ISMA has proposed the government to recognise the lower carbon emissions of flex-fuel vehicles and incentivise manufacturers accordingly. "The recent Final Draft CAFE-3 circulated by BEE (Bureau of Energy Efficiency) has reduced the Volume Derogation Factor provided for FFV from 1.5 to 1.1. This is an unexpected development...," ISMA said in a letter to Power Secretary. 

A higher volume derogation factor for flex-fuel vehicles will incentivise production as it is a multiplier applied to vehicles while calculating manufacturers' average fuel efficiency. Under CAFE-3 norms, original equipment manufacturers are required to produce vehicles with lower carbon dioxide emissions while accelerating the adoption of electric vehicles, hybrids, and alternative fuels such as biofuels, in line with India's net-zero target for 2070. 

ISMA has also asked the government to retain the Carbon Neutrality Factor of ethanol blends, such as 8% for E20 to E30, and 22.3% for flex-fuel vehicles. A higher carbon neutrality factor credits reduced emissions by vehicles running on cleaner fuels such as ethanol blends. 

The association has also asked for the inclusion of hybrid flex-fuel vehicles such as FFV-PHEV, flex-fuel vehicles that can also run on electric batteries, and FFV-REEV, or flex-fuel vehicle-range extended electric vehicles. "At the same time, we also request that the CAFE-3 notification be issued at the earliest without any further delay," the letter dated Apr. 13 read.  End

Reported by Afra Abubacker

Edited by Deepshikha Bhardwaj

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