The Ministry of Heavy Industries (MHI) has clarified that it has not formulated any separate phased national policy to incentivize flex-fuel vehicles operating on fuel blended with more than 20% ethanol. Additionally, MHI confirmed it has not conducted any study regarding the incentivization of flex-fuel and electric vehicles.
Production Linked Incentive Scheme Performance
The PLI-Auto scheme for Automobile & Auto Components, implemented on an all-India basis, shows significant cumulative progress as of 31 March 2026. Total investment under the scheme reached Rs 44,326 crore, while incremental sales against the base year (FY2019-20) stood at Rs 52,414 crore. The scheme has generated employment for 67,820 people, with incentive disbursements totaling Rs 2,386.36 crore.
The scheme mandates minimum Domestic Value Addition (DVA) of 50% for availing incentives to boost domestic manufacturing and localization of Advanced Automotive Technology (AAT) products. As of 28 July 2026, 18 applicants have received DVA certificates for 155 AAT products/variants.
Ethanol Blended Petrol Programme Approach
The government has adopted a balanced approach to the Ethanol Blended Petrol (EBP) Programme, ensuring water sustainability, food security and farmers' interests remain paramount. Under the National Policy on Biofuels, ethanol is produced from multiple approved feedstocks including sugarcane-based feedstocks, maize, damaged foodgrains, broken rice, foodgrains unfit for human consumption, and surplus foodgrains approved by the National Biofuel Coordination Committee (NBCC).
The government is promoting crop diversification toward less water-intensive feedstocks such as maize. An Expert Committee constituted by the Ministry of Agriculture & Farmers Welfare in 2024 examined water requirements of various ethanol feedstock crops, and its recommendations are being considered during programme implementation. Water-use efficiency is being enhanced through micro-irrigation, drip irrigation, and other conservation measures under the Per Drop More Crop component of Pradhan Mantri Krishi Sinchayee Yojana. Many sugar mills are encouraging farmers to adopt water-efficient cultivation practices.
Molasses-based distilleries with incineration boilers and grain-based distilleries are required to operate as Zero Liquid Discharge (ZLD) units, enabling recycling and reuse of process water while eliminating liquid effluent discharge.