ISMA Calls for reinstating flex-fuel benefits in upcoming CAFE-3 Norms

The Indian Sugar & Bio-Energy Manufacturers Association (ISMA) has requested the Ministry of Power to restore key incentives for flex-fuel vehicles (FFVs) in the draft Corporate Average Fuel Efficiency (CAFE-3) norms. ISMA warns that reduced support for FFVs could slow ethanol demand and impact India's energy security goals.

Key Highlights

• ISMA requests restoration of incentives for flex-fuel vehicles in Draft CAFE-3 norms
• Reduced support could slow ethanol demand and impact India's energy security objectives
• ISMA calls for inclusion of new vehicle technologies in regulatory framework
• Timely notification and stable policy environment urged for industry confidence

ISMA's Concerns and Proposals

ISMA, representing both private and public sector sugar and bioenergy producers, acknowledged ongoing government support for ethanol-based transport. However, the association expressed concern over the reduction of the Volume Derogation Factor (VDF) in the latest draft. ISMA argues that a weaker incentive structure may discourage automakers from increasing FFV production.

India achieved its 20 percent ethanol blending target ahead of schedule. This milestone was supported by policy interventions and investments from sugar mills and grain-based distilleries. ISMA notes that ethanol production capacity now exceeds current blending needs. The association believes expanding the FFV ecosystem is the most direct way to use this surplus, support rural incomes, and ensure stable returns for farmers.

ISMA also highlights ethanol's role in reducing India's dependence on imported crude oil. The association contends that FFVs can help build resilience against global energy market disruptions. The ethanol program has already led to foreign exchange savings and timely payments to farmers through the supply chain.

Recommendations for Policy and Regulation

ISMA has proposed restoring earlier incentive levels under both the Carbon Neutrality Factor (CNF) and VDF provisions. The association believes this will maintain industry confidence. ISMA also recommends including new vehicle technologies, such as FFV-Plug-in Hybrid Electric Vehicles (FFV-PHEV) and FFV-Range Extended Electric Vehicles (FFV-REEV), in the regulatory framework. This inclusion would ensure the norms remain adaptable to future developments.

ISMA further urges the timely notification of the CAFE-3 norms. The association stresses that regulatory clarity is essential for automakers, investors, and ethanol producers planning future investments. ISMA maintains that a stable policy environment is necessary to align India's transportation transition with its energy security, environmental sustainability, and rural economic development goals.

Current Status of CAFE-3 Norms

The Ministry of Power has not yet responded publicly to ISMA's letter. The CAFE-3 norms, which set fuel efficiency standards for passenger vehicles in India, remain in draft form. They are currently under stakeholder consultation before final notification.

Also Read: India’s Russian crude imports double in March amid West Asia conflict

CarBike 360 Says

​As India sharpens its focus on cleaner mobility, ISMA’s push to reinstate flex-fuel incentives highlights a critical opportunity to align agricultural and automotive sectors. Supporting flex-fuel technology could accelerate ethanol adoption, cut emissions, and reduce oil imports. The final CAFE-3 framework will play a key role in determining how effectively India balances sustainability, energy security, and industry growth.