New Indian freedoms on ethanol production to reduce sugar glut by 2 million metric tons

In India, the new rule allowing ethanol to be produced directly from sugar cane, instead of molasses, is expected to ease the sugar glut which threatens the Indian industry, by reducing the Indian sugar surplus by 2 million tonnes in 2007/08.

India is projected to have a surplus of 11.5 million tonnes, based on a projected 33.15 million tonnes harvest this year, which would be a world record for national sugar production.  Recently, 10 sugar-producing states have agreed to a framework for a national E10 mandate. India’s sugar crop this year is expected to exceed 29 million metric tons. With domestic consumption at 19 million tons and exports at 1.5 million tons, the country is turning to ethanol production to avoid a catastrophic sugar glut.

India announced an E10 mandate that would take effect in October 2008. The Indian Minister of Agriculture had called a meeting of sugar-producing states to establish a framework for cooperation.

Last month, Bharat Petroleum signed with Brazilian giant Petrobras to import biodiesel and ethanol. There has been extensive discussion in the Indian press of the current production capability of Indian producers as Indian contemplates moving from an E5 to E10 mandate.

Indian officials have admitted falling well short in procurement of the ethanol needed to meet the E5 mandate, while local producers and buyers have said they see no trouble in producing supplies to meet E10 if it is imposed. Meanwhile, Brazil has been urgently seeking new ethanol export markets after falling more than 80% short of its 2007 export targets in the wake of collapsed Nigerian and Venezuelan deals.

India has been placing increased emphasis on biodiesel production, especially focused on the prospects for jatropha biodiesel.

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