India Considers U.S. Request to Ease Ethanol Import Restrictions Amid Trade Negotiations

New Delhi, May 17 (KNN) India is currently evaluating a U.S. proposal to relax restrictions on ethanol imports for fuel use, a move that could significantly impact ongoing trade discussions between the two nations. 

The U.S. is advocating for India to permit ethanol shipments for blending with gasoline, a practice currently restricted to non-fuel purposes and subject to high import duties in India .

This request has raised concerns among Indian industry officials, who argue that allowing ethanol imports could undermine substantial investments made in domestic ethanol production capacities. 

A senior industry official emphasised that acceding to the U.S. demand might jeopardise the country's efforts to bolster its biofuel sector.

The timing of this proposal is notable, as India's ethanol production from sugarcane has declined, with grain-based ethanol now accounting for approximately 66% of the supply in the 2024-25 ethanol supply year. 

Oil marketing companies have allocated around 9.96 billion liters of ethanol for blending, highlighting the growing reliance on grain sources .

U.S. President Donald Trump recently claimed that India had offered to eliminate all tariffs on U.S. goods, a statement that was promptly clarified by India's Foreign Minister S. Jaishankar, who stated that trade talks are still in progress.

Commerce Minister Piyush Goyal is scheduled to visit the U.S. this weekend to continue negotiations .

American agricultural stakeholders, including the National Corn Growers Association, are pushing for the inclusion of corn-based products like ethanol in any trade agreement with India. 

However, Indian state-owned oil refiners express apprehension that U.S. ethanol could initially be sold at low prices to capture market share, only for prices to increase later, potentially harming domestic businesses .

As India advances its biofuel initiatives, achieving nearly 20 per cent ethanol blending in gasoline ahead of its 2030 target, the decision on ethanol imports will play a crucial role in shaping the future of its energy and trade policies.

(KNN Bureau)