The Curious Case of India’s Bioethanol (Biofuel) Policy: Doomed for failure?

Akul Dayal

biofuelsDespite impressive economic performance, a huge import bill and burgeoning trade deficit cast a macroeconomic shadow over India’s future growth. India’s crude oil import bill stood at 140 billion USD in FY2011-12 which is a substantial component of the 185 billion USD trade deficit. In order to reduce their crude oil requirements, the US and Brazil have already seen a surge in bioethanol blending of gasoline. India is the 4th largest producer of ethanol behind the US, Brazil and China. It is baffling why petrol-bioethanol blending has not taken off in India despite a functional National Biofuel Policy since 2009, an excess of sugarcane production (principal feedstock for ethanol), the highest relative fuel prices in the world, emission reduction benefits and alarming energy security concerns.

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