Report provides update of India’s ethanol industry

By Ann Bailey | July 01, 2016

A decline in Indian sugarcane acres during the past two growing seasons is expected to result in a decline in the country’s ethanol production in 2017, a report filed with the USDA Foreign Agricultural Service’s Global Agricultural Information Network said. The recently released GAIN report estimates ethanol production in India will decline 8 percent to 1.9 billion liters next year.

The fuel ethanol national average blending rate will increase to 2 percent, up from the current estimated blending rate of 1.9 percent, GAIN said.  Ethanol is expected to replace 700 million liters of gasoline as a result of the increase in national average blending rate. The average blending rate now is pegged at 1.9 percent as parastatal companies are expected to blend 600 million liters of ethanol with gasoline.

India will import 440 million liters of ethanol this year if market conditions are typical, GAIIN estimated. Import volumes will further increase to 600 million liters during the out-year to boost local supplies. Last year, the United States was India’s largest ethanol supplier and in 2014 sold 66 million liters of denatured ethanol, valued at more than $51 million, to the country. Brazil, India’s second largest ethanol supplier in 2015, did not actively ship the biofuel to the country in 2014.

During the past decade, ethanol consumption in India has grown from 1.8 billion liters to 2.4 billion liters this year, GAIN said. Next year, consumption is expected to rise to 2.5 billion liters. Of those 2.5 billion liters, 700 million liters will be consumed by fuel ethanol and 1.8 billion liters will be consumed by industrial and chemical companies, the report said.

More than 96 percent of India’s import demand has been met by the U.S., Brazil, Spain, Bhutan and Pakistan during the past decade. Brazil dominated 60 percent of the export market until 2011 when the U.S. began to compete, GAIN said. Since 2011, sales of U.S. ethanol to India have grown to 72 percent of the market share and Brazil sales fell to 20 percent. Spain’s ethanol export sales of ethanol to India remain at 4 percent.