India is considering a U.S. request to ease restrictions on ethanol imports as part of broader trade negotiations aimed at avoiding new tariffs. American officials are pressing New Delhi to allow ethanol shipments for blending with gasoline, a shift from India’s current policy that supports domestic production and only permits imported ethanol for non-fuel purposes, according to sources familiar with the matter, reported Bloomberg.
The South Asian nation has been actively pursuing an early agreement with Washington. During a recent visit to Qatar, former U.S. President Donald Trump claimed that India had agreed to eliminate tariffs on American goods, though Indian Foreign Minister S. Jaishankar later clarified that discussions were still underway. Commerce Minister Piyush Goyal is expected to travel to the U.S. this weekend to continue the talks.
Officials from India’s commerce and oil ministries did not respond to requests for comment. The oil ministry oversees biofuel regulations.
The push from Washington comes amid strong lobbying from American farmers eager to access India’s vast consumer market. Vice President JD Vance and groups like the National Corn Growers Association have criticized India’s trade barriers, urging the U.S. administration to include corn and corn-derived products—such as ethanol and distillers dried grains—in any future agreement.
According to a Bloomberg report, the negotiations could span up to 19 areas, including agriculture, e-commerce, and data storage.
However, loosening the import rules could pose challenges for India. The country has been working to reduce its energy import dependence, which makes it vulnerable to global price swings. Promoting domestic ethanol production has been a key part of this strategy. India, the world’s third-largest oil importer, reached nearly 20% ethanol blending in gasoline this February—five years ahead of its 2030 goal. The government has been encouraging the use of locally available raw materials like sugarcane juice, corn, spoiled potatoes, and unusable food grains to produce ethanol.
Sources also noted concerns within Prime Minister Narendra Modi’s administration about the potential impact of unrestricted ethanol imports on Indian farmers, a significant political constituency. The government has been nudging them to move away from water-intensive crops in favor of alternatives like corn, which is vital for ethanol production.
Additionally, state-run oil companies worry the U.S. could initially offer ethanol at low prices to capture market share, then raise rates later, which could hurt their margins. According to the oil ministry, these refiners plan to increase ethanol purchases by nearly 50% this supply year—targeting around 10 billion liters, up from the previous year.
