India ranked fifth in world ethanol production chart

NEW DELHI: India ranks fifth in ethanol production next to European Union, China, US and Brazil, says a Goldman Sachs report on biofuel and food security. While China produced 3.65bn litres in ’04, India stood at 1.75bn the same year. Brazil topped the chart with 15.24bn.

India’s total annual petrol consumption is 10bn litres. Ethanol-doped petrol can fulfil about 5% of this at about 0.5bn, according to data provided by ministry of petroleum.

While India and China are still in the process of formulating a biofuel policy, China already has embarked on a National Fuel Ethanol Programme, says the report. This has made it mandatory for 10% ethanol blend in five provinces of China since ’04. The country intends to add 26 more cities to the list.

India, on the other hand, will see use of 5% oil doped with ethanol in all states except for the North-east after November ’06, says the ministry of petroleum. It will be mandatory for public oil companies to buy oil produced from jathropa, pongamia and other plant oils and sell it as a 5% blend, rising to 20% by ’20. According to the report, India is, however, struggling to reach its current production target.

With regard to fiscal incentives, while the 5% ethanol-doped petrol is exempted from central excise duty in India, China provided subsidies for corn growth for ethanol of up to $225 per tonnes in ’04. There are four ethanol plants currently operating in China benefiting from this subsidy.

Also, fuel ethanol is exempted from consumption tax and value added tax in China. Brazil, US and most European countries also have financial support systems, including tax credit, for ethanol producers, says the report.