India Reviews US Push to Ease Ethanol Import Restrictions

India is weighing a U.S. appeal to relax ethanol import restrictions as part of wider trade talks to stave off punitive tariffs. Washington is pursuing access to India's biofuel market, in the form of blending gasoline with ethanol—a departure from existing Indian regulations of importing ethanol for non-fuel purposes, favoring domestic production.

The negotiations follow India's efforts to negotiate an early trade agreement. U.S. President Donald Trump recently announced that New Delhi proposed eliminating all the tariffs on US products, although Indian Foreign Minister S. Jaishankar later explained that there were ongoing discussions. Commerce Minister Piyush Goyal will soon visit the U.S. to hold discussions.

American farmers, with the support of organizations such as the National Corn Growers Association, are pushing for corn-derived goods such as ethanol to be part of the deal. Vice President JD Vance has denounced India's trade-restricting practices, terming the market "essentially closed off."

Though opening the market to U.S. exporters might be good for them, Indian authorities fear such an action would throw a spanner into the works in trying to reduce energy imports. India, the third-biggest oil-consuming nation globally, reached almost 20% blending of gasoline with ethanol in February—five years ahead of schedule to meet its 2030 target. The government expects biofuels from domestic sources like sugarcane juice, corn, and grains that are rotten to improve energy security.

There are also concerns regarding the effect on Indian farmers and local ethanol producers. The government has promoted a move away from water-guzzling crops to substitutes such as corn. State-owned oil refiners worry that American suppliers may first sell inexpensive ethanol to corner the market before raising prices later. India's oil ministry is estimating refiners will increase purchases of ethanol by almost 50% this year to 10 billion liters.