India Plans To Divert Sugar Exports Towards Ethanol Production

Last updated on August 9th, 2021 at 10:01 am

The Modi government is looking at fueling more cars with ethanol that would use sugar as its raw material. India is also planning to permit the production of ethanol-based flex engines as well. There is a definite higher use of biofuels on the cards, especially in the transport sector.

The intent is to ease India’s economic burden and dependency on crude that has been showing escalated prices. India continues to be the third-largest oil importer in the world. This development will nearly save up to $4 billion each year, as per the government estimates.

In June this year, PM Modi advanced a target for blending 20 percent ethanol in gasoline by 2025. This seems to be five years earlier than the planned targets. Obviously, the advantages are multifold. It would help in reducing air pollution, cut India’s oil import bills and also it will help soak up a domestic sugar glut and at the same time increase investment in the rural areas.

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While India is looking at using sugar as its raw material, this might increase the price of sweeteners overall. Through this announcement, the ethanol program has been fast-tracked. This will now divert nearing to six million tons of sugar toward fuel production annually by the year 2025. Strangely, this is exactly the amount of sugar that India produces and exports annually, next to Brazil.

If India still wants to export its sugar, it would definitely need to increase its acreage. Statistics have confirmed that to meet its 2025 target, India would need to (almost) triple its ethanol production to about 10 billion litre a year. This has been confirmed as per the nation’s oil secretary Tarun Kapoor.

This would require about $7 billion of investment, as well as the challenge, would be to create that kind of capacity required in a short period, nearing to 3 to 4 years.