The Ministry of Heavy Industries (MHI) has clarified that it has not formulated any separate phased national policy to incentivise flex-fuel vehicles capable of operating on fuel blends containing more than 20% ethanol. The clarification was provided in Parliament, where the ministry also shared the latest progress under the Production Linked Incentive (PLI) Scheme for Automobile and Auto Components.

As of March 31, 2026, the PLI-Auto scheme has attracted cumulative investments of Rs 44,326 crore, generated incremental sales of Rs 52,414 crore over the FY2019-20 base year, created 67,820 jobs and disbursed incentives worth Rs 2,386.36 crore.

To promote domestic manufacturing and localisation, the scheme mandates a minimum Domestic Value Addition (DVA) of 50 per cent for eligible Advanced Automotive Technology (AAT) products. As of July 28, 2026, DVA certificates had been issued to 18 applicants covering 155 AAT products and variants.

The ministry further stated that it has not conducted any study on incentivising flex-fuel vehicles or electric vehicles.

On ethanol blending, the government said it continues to follow a balanced approach under the Ethanol Blended Petrol (EBP) Programme, with emphasis on water sustainability, food security and farmers’ interests. Under the National Policy on Biofuels, ethanol production is permitted from multiple approved feedstocks, including sugarcane-based feedstocks, maize, damaged foodgrains, broken rice, foodgrains unfit for human consumption, surplus foodgrains approved by the National Biofuel Coordination Committee (NBCC), and other approved agricultural feedstocks.

The government is also encouraging crop diversification towards comparatively less water-intensive feedstocks such as maize. An expert committee constituted by the Ministry of Agriculture & Farmers Welfare in 2024 examined the water requirements of various ethanol feedstock crops, and its recommendations are currently under consideration.

To improve water-use efficiency, the government is promoting micro-irrigation, drip irrigation and other water conservation measures under the Per Drop More Crop component of the Pradhan Mantri Krishi Sinchayee Yojana. In addition, several sugar mills are encouraging farmers to adopt water-efficient cultivation practices.

The ministry added that 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.