New Delhi, Aug. 20 -- In a first, the government is considering a plan to introduce new-generation vehicles with flex-fuel engines that run on different combinations of diesel and isobutanol, a biofuel derived from ethanol, two people aware of the matter said.

The new diesel engines would operate on the same principle as flex-fuel engines that use varying blends of petrol and ethanol and may even be able to run entirely on isobutanol.

Several auto companies are expected to launch two-wheelers, three-wheelers and small commercial vehicles based on these flex-fuel engines, which can use one or more fuel types and are said to reduce consumption of fossil fuels and cut carbon emissions.

The ministry of road transport and highways has asked...