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India May Double Ethanol Requirement to 10%

Mint. A group of ministers (GoM) in the Indian government has recommended that India adopt a mandatory blending of 10% ethanol with gasoline.

While blending—at 5%—is currently optional for individual states, the GoM has recommended that 10% blending of ethanol be made mandatory by October 2008, with only exceptions being Jammu and Kashmir, the north-eastern states, Andaman and Nicobar Islands, and Lakshadweep.

The recommendation now goes to the cabinet committee on economic affairs (CCEA) for approval. An official close to the development, who spoke on the condition of anonymity because of the far-reaching implications of the group’s decision, said the GoM has also agreed to recommend a uniform purchase price of Rs21.50 per litre, ex-factory, for the supply of ethanol, to be implemented all over the country for the next three years.

India is the world’s second-largest sugar producer behind Brazil, and is currently facing a sugar glut. Prices have fallen 25% over the last year. Most ethanol is currently made from molasses left after sugar production, but the government wants to encourage the direct production of ethanol from sugar cane juice in an effort to create additional demand.



10% of India’s gas consumption in less than one year. It usually takes 18 months to build an ethanol factory. Sounds like nonsense. The same go for the idea about the government setting a price. The market will set it or you will have all sorts of problems that socialist economies are experiencing. Good though that they are ambitious about biofuels.


Few things attract investment capital quite like a mandated, captive market with a guaranteed price and steeply rising demand curve...

1.2 billion people and 9.6% annual economic growth means that using just petroleum for transportation needs is not a viable option for India even in the short term. Just to "keep even" they probably need to increase the ethanol percentage more than 10% a year.

Increased use of ethanol will help level their petroleum demand while they wait/work on greater efficiency and non-petroleum transportation.

Jim G

Most arguments I've read against ethanol in the US press sounded at first hearing like the claim that all ethanol is a waste of public money and a fraud. But on closer examination, the actual contention has been merely that corn (maize), something the US has in abundance, is a poor choice of feedstock with a poor energy return.

A great example in yesterday's New York Times: http://www.nytimes.com/2007/09/19/opinion/19wed1.html?hp attacks the US corn ethanol industry and subsidies. It then uses as an argument that it would make better economics for the US to dump importation tariffs and obtain the ethanol from Brazil (a nation that enjoys lower land, labor and capital costs per $US, and which uses a much more sugar-intensive feedstock than corn). But it's doubtful one will ever see a Times editorial page demanding the end of that tariff. Likewise, there's no mention that this industry in Brazil was heavily subsidized for decades before it became the hot profitable sensation it is now.

Ethanol growth beyond the US, in places like Brazil, India, Spain and China, indicate a much wider trend toward it that has nothing to do with US agribusinesses. And this seems to me the most interesting part of all of this.

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