India reviews US push to lift ethanol curbs amid trade deal talks

Business Standard

16-05-2025

India is reviewing the United States' (US') request to lift restrictions on ethanol imports as it negotiates a wider trade deal with Washington to avoid punitive tariffs, news agency Bloomberg reported on Friday.
The development was confirmed by senior industry officials, who added that the US was intensely lobbying for the same.
India at present does not allow imports of ethanol as fuel, and levies hefty duties on such imports for non-fuel purposes.
'Yes, the US has been lobbying for opening up ethanol imports for the past several weeks, but the request should not be heeded, or else all the investments made into putting up the domestic capacities for producing ethanol would come into question,' a senior industry official said.
Bloomberg reported that US negotiators want India to allow shipments of the biofuel for blending with gasoline, according to people familiar with the matter, a change from current rules that promote domestic supply and permit overseas purchases of ethanol only for non-fuel use.
The lobbying for the opening up of ethanol imports from the US comes at a time when India's ethanol production from sugarcane has fallen behind that from grains for the second successive supply year.
In the ethanol supply-year 2024-25 (November to October) till March, oil marketing companies (OMCs) have allocated supplies of around 9.96 billion litre of ethanol.
Of this, around 66 per cent will have to come from grains, while the balance will come from sugarcane. Till a few months back, both the feedstocks had supplied equal quantities of ethanol.
Meanwhile, the Bloomberg report said that US President Donald Trump said in Qatar on Thursday that New Delhi had offered to abolish all tariffs on US goods — comments that were walked back only hours later by India's Foreign Minister S Jaishankar, who said talks were ongoing. Commerce Minister Piyush Goyal is set to arrive in the US this weekend for further negotiations.
American farmers have been lobbying for access to the world's most populous nation, and high-profile figures like US Vice-President JD Vance have bemoaned trading conditions that have left India 'effectively closed off', the agency reported.
The National Corn Growers Association has called on the Trump administration to include corn and corn-based products, such as ethanol and distillers' dried grains, in any trade deal with India.
India has been aggressively promoting biofuels. India has achieved almost 20 per cent blending in gasoline in February, five years ahead of its 2030 target. It's pushing for the use of raw materials like sugar cane juice, corn, rotten potatoes, and damaged food grains to make ethanol.
India's state-owned oil refiners, meanwhile, are concerned that the US may sell ethanol at low rates to capture the market, only to later raise prices, two of the people said, a move that would hurt their business.
According to the oil ministry, these processors plan to lift ethanol purchases by almost 50 per cent from a year earlier to 10 billion litres in the current supply year, which began in November.