India is reviewing a US request to lift restrictions on ethanol imports as it negotiates a wider trade deal with Washington to avoid punitive tariffs.
US negotiators want the South Asian country to allow shipments of the biofuel for blending with gasoline, according to people familiar with the matter, a change from current rules that promote domestic supply and permit overseas purchases of ethanol only for non-fuel use.
India, one of the first countries to begin trade negotiations with the US, has been pushing for an early deal. President Donald Trump said in Qatar on Thursday that New Delhi had offered to abolish all tariffs on US goods — comments that were walked back only hours later by India’s Foreign Minister S Jaishankar, who said talks were ongoing. Commerce Minister Piyush Goyal is set to arrive in the US this weekend for further negotiations.
India’s commerce ministry did not reply to a request for comment. The oil ministry, which is responsible for regulations around biofuels, also did not respond to emailed questions.
American farmers have been lobbying for access to the world’s most populous nation, and high-profile figures like Vice President JD Vance have bemoaned trading conditions that have left India “effectively closed off”. The National Corn Growers Association has called on the Trump administration to include corn and corn-based products, such as ethanol and distillers dried grains, in any trade deal with India.
Bloomberg reported last month that trade discussions are likely to cover 19 areas, including farm goods and e-commerce and data storage.
Any relaxation of rules by India, however, could undermine the country’s efforts to cut a huge energy import bill that leaves it heavily dependent on outside nations and at the mercy of fluctuating markets, the people said. They asked not to be named as the discussions are not public.
India has been aggressively promoting biofuels in large part to reduce this vulnerability. The world’s third-largest oil buyer achieved almost 20% blending in gasoline in February, five years ahead of its 2030 target. It’s pushing for the use of raw materials like sugar cane juice, corn, rotten potatoes and damaged food grains to make ethanol.
Prime Minister Narendra Modi’s administration is also likely to worry about the impact on farmers of unlimited imports of green fuel, the people said. The government has been encouraging producers, a powerful voting bloc, to a shift away from water-intensive crops and toward alternatives like corn, a key ethanol feedstock.
State-owned oil refiners, meanwhile, are concerned that the US may sell ethanol at low rates to capture the market, only to later raise prices, two of the people said, a move that would hurt their business. According to the oil ministry, these processors plan to lift ethanol purchases by almost 50% from a year earlier to 10 billion liters in the current supply year, which began in November.
