The Indian Sugar & Bio-Energy Manufacturers Association (ISMA) has requested the Ministry of Power to reinstate incentives for Flex Fuel Vehicles (FFVs) under the Draft Corporate Average Fuel Efficiency (CAFE-3) norms, stating that the reduced provisions in the current draft could slow the automotive industry's shift towards ethanol-compatible vehicles.

In its communication to the government, the industry body representing private and public sector sugar and bio-energy producers acknowledged the existing policy support for ethanol-based transportation. However, ISMA raised concerns regarding the reduction of the Volume Derogation Factor (VDF), an incentive parameter, in the latest regulatory draft, stating that a weaker incentive structure may discourage automakers from expanding FFV production.

India achieved its 20% ethanol blending target ahead of schedule, supported by policy measures and investments from sugar mills and grain-based distilleries. ISMA stated that, with ethanol production capacity exceeding current blending requirements, expanding the flex-fuel vehicle ecosystem could absorb the surplus. It added that this may also affect rural incomes and farmer returns.

The association also referred to ethanol's role in reducing India's dependence on imported crude oil, stating that FFVs may contribute to addressing risks linked to geopolitical disruptions in global energy markets. ISMA stated that the ethanol programme has resulted in foreign exchange savings and has contributed to payments to farmers through the supply chain.

Among its proposals, ISMA called for the restoration of earlier incentive levels under both the Carbon Neutrality Factor (CNF) and VDF provisions. It also recommended including vehicle technologies such as FFV-Plug-in Hybrid Electric Vehicles (FFV-PHEV) and FFV-Range Extended Electric Vehicles (FFV-REEV) within the regulatory framework.

ISMA also urged the notification of the CAFE-3 norms, stating that regulatory clarity is required for automakers, investors, and ethanol producers when planning future commitments. It added that a consistent policy framework would be required to align the transportation sector with energy security, environmental, and rural economic considerations.

The Ministry of Power has not issued a public response to ISMA's letter. The CAFE-3 norms, which set fuel efficiency standards for passenger vehicles in India, remain in the draft stage and are subject to stakeholder consultation before final notification.