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India's ethanol consumption for fuel at all-time high, lags goals: USDA

Houston — The volume of ethanol blended with gasoline is at an all-time high in India thanks to the government allowing a new feedstock in the production process, but continues to lag goals, the US Department of Agriculture said Monday.

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Ethanol consumption for fuel use is poised to reach 1.25 billion liters in 2018, the highest volume on record, according to the USDA's annual report on biofuels in India.

The country could reach an ethanol blend of 3.2% in 2018, the second-highest rate after 2016's 3.3%. The blending rate, however, remains short of government targets of a 10% rate, according to the report.

As part of a new biofuels policy released earlier this year, the government proposed an ethanol blend target of 20% by 2030.

The new policy allows the use of ethanol produced from B-heavy molasses, sugarcane juice and damaged food grains that are unfit for human consumption.

India's policy does not allow for imported ethanol to be used for fuel blending. Instead, domestic ethanol production can be used for fuel blending while imports are diverted to industrial demand.

That means that cheap prices elsewhere in the world do not necessarily help India meet its blending targets as domestic fuel blending is capped by domestic production.

Sugar supplies in India have been high and the updated biofuels policy provides a new source of demand for sugar.

"With one metric ton of B-heavy molasses you can produce 600 liters of ethanol," said Kathlyn Saillen of Platts Analytics. "So if 3.3 billion liters of ethanol is produced from B-heavy molasses, it will take around 1.55 million mt sugar away from the market."

The country would need approximately 3.3 billion liters of ethanol to reach a 10% blend rate. -- Joshua Pedrick,

-- Edited by Richard Rubin,