New Delhi: The Indian Sugar and Bio-Energy Manufacturers Association has urged the government to include stronger incentives for flex-fuel vehicles in the proposed Corporate Average Fuel Efficiency (CAFE-3) norms, warning of a growing surplus in ethanol production capacity.
In a letter dated April 13 to Power secretary Pankaj Agarwal, ISMA Director General Deepak Ballani said the policy framework should clearly promote flex-fuel vehicles (FFVs) and electrified flex-fuel options. He cautioned that without faster adoption of such technologies, India could face excess ethanol supply in the coming years, The Hindu Businessline reported.
The appeal comes as the government discusses the draft CAFE-3 norms with the automobile industry and considers introducing higher ethanol blends, including E25, as part of its long-term roadmap.
Ballani also called for tax relief to improve demand for flex-fuel vehicles. He suggested that Goods and Services Tax (GST) on such vehicles should be reduced to 5 per cent, in line with electric vehicles, instead of the current 18-40 per cent applicable to petrol and diesel vehicles.
Highlighting the flexibility of the technology, Ballani said flex-fuel vehicles can run on a wide range of ethanol blends-from E20 and E22 to E85 and E100-allowing consumers to choose fuel based on price and availability.
However, he noted that large-scale adoption would take time and require continued policy support. Transitioning the existing vehicle fleet to flex-fuel systems, he said, could strengthen India's energy security and position it better globally.
Drawing a comparison, Ballani pointed to Brazil, where consumers regularly switch between different ethanol blends depending on fuel prices.
On the supply side, ISMA highlighted that India's ethanol production capacity is already far ahead of demand. Current capacity stands at around 2,000 crore litres, with an additional 400 crore litres expected this year, taking total capacity to about 2,400 crore litres next year. In contrast, only about 1,100 crore litres are required to meet 20 per cent blending, leaving a significant surplus even if blending levels rise further.
The association also raised concerns over a proposal in the draft norms to reduce the incentive factor for flex-fuel vehicles, saying it could discourage their adoption at a time when ethanol utilisation needs to be expanded.
Industry stakeholders believe the final CAFE-3 framework will play a key role in shaping India's vehicle technology choices, as policymakers try to balance fuel efficiency goals with ethanol use and long-term energy security.