The Indian Sugar and Bio-Energy Manufacturers Association (ISMA) has raised alarms regarding a notable decrease in incentives for flex fuel vehicles (FFVs) in the latest draft of the Corporate Average Fuel Efficiency (CAFE-3) norms. In a letter to Power Secretary Pankaj Agarwal, ISMA Director General Deepak Ballani criticized the reduction of the volume derogation factor (VDF) from 1.5 to 1.1, describing it as an unexpected development that may deter automakers from introducing FFVs. These vehicles, designed to run on high ethanol blends, are seen as a vital solution to boost ethanol consumption in India, especially as the country faces a surplus in ethanol production capacity. The CAFE-3 norms, set to take effect in April 2027, will require car manufacturers to limit the average carbon emissions of their fleets. The latest draft indicates a policy shift, proposing lower VDFs for FFVs and strong hybrid vehicles while maintaining higher incentives for electric vehicles. ISMA argues that this approach overlooks the immediate challenges of the ethanol industry, which is under financial strain due to excess production. The association has called for the restoration of the previous VDF and higher incentives for advanced vehicle technologies.