Brazil offered its ethanol producing technology with India to combat shortage of sugar stock

According to the Financial Express, Brazil has offered to share its ethanol producing technology with India in an effort to resolve their long-running issues with the sugar sector.

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The development was the result of a ministerial conference and several rounds of official negotiations between the two sides.

India wants to go forward with the use of biofuels swiftly for both stand-alone use in transportation and additionally for blending with petroleum fuels, thus the offer on ethanol technology may be the decisive factor.

Brazil claims to be willing to share with us its ethanol manufacturing technology. It is advantageous. We should be able to achieve success (in negotiations), an unnamed official was reported as saying by the Financial Express. But during the negotiations, the representative kept the details of the Indian proposal a secret.

Brazil is leader in production of Ethanol

Brazil is a significant producer of sugarcane and ethanol. It has reached a 25% level and is the market leader in ethanol-added petrol. Flex-fuel vehicles that can run on either petrol or ethanol have now captured a substantial market in Brazil, accounting for 83% of sales of new light vehicles in 2022.

India intends to enhance the existing 10% ethanol blend to 20% by FY 26. Additionally, ethanol and diesel mixtures are being tried. It is also the creator and coordinator of the Global Alliance, which was founded on its concept on September 9 during the G-20 Summit.

Prime Minister Narendra Modi had launched it alongside the leaders of the US, Argentina, Brazil, Italy, Singapore, the United Arab Emirates, Mauritius, and Bangladesh.

The first electric flex-fuel vehicle made in India by Toyota was introduced by Roads and Highways Minister Nitin Gadkari late last month. All major automakers presently provide vehicles with flex fuel engines.

Indian government is promoting use of ethanol 

In addition to cutting the cost of importing crude oil for transportation and assisting in the decarbonization of transportation, the Indian government is promoting ethanol in order to boost farm income. According to some sources, ethanol might raise sugarcane producers' incomes by 15%.

Since farmers are making more money from ethanol, there is no pressure on price rises for sugar. Additionally, it boosts the sugarcane processors' cash flow and profitability.

The India-Brazil sugar dispute is significant since it involves two of the largest sugar producers in the world. The outcome of the dispute can significantly impact the global sugar market.

India complained to the World Trade Organisation (WTO) about Brazil's sugar subsidies in 2005, stating that they were harming Indian sugar farmers and distorting the global sugar market. This started the India-Brazil sugar dispute. After the WTO ruled in favour of India, Brazil was forced to reduce its sugar subsidies.

Despite this, the dispute has continued, with Brazil and India trading accusations of violating WTO rules. India's support initiatives for sugarcane farmers and sugar export subsidies came under fire from Brazil in 2019. Brazil claimed that these acts violated the Agriculture Agreement (AoA) of the WTO.

The WTO's Dispute Settlement Panel stated in a report made available to members in December 2021 in response to a complaint from Brazil that India's aid to sugarcane producers between 2014–15 and 2018–19 surpassed the allowable amount of 10% of the total amount of production, in violation of AoA provisions. Guatemala and Costa Rica subsequently requested to join the argument. Third-party parties from other nations took part in the argument.

India has challenged the panel's ruling, but because the WTO's Appellate Body is no longer in operation, efforts have been made to reach a bilateral agreement to settle the conflict.

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