USTR Flags India’s Ethanol Import Ban as Trade Tensions Rise

As global trade tensions rise, the United States has spotlighted India’s ethanol import policy in its latest National Trade Estimate Report, released on January 8, 2025. The U.S. Trade Representative (USTR) has included India among countries imposing barriers that allegedly harm American businesses and distort trade practices.

India’s Ethanol Policy Under Scrutiny

According to the USTR report for 2025, India’s ban on fuel ethanol imports has been marked as a significant barrier. The report lists 10 such practices across countries, including China, Japan, the European Union, and India, claiming these measures limit market access for U.S. exporters and affect American workers.

India currently prohibits the import of ethanol for fuel purposes. For non-fuel ethanol, licensing is mandatory under guidelines set by the Directorate General of Foreign Trade (DGFT). These restrictions have been in place since May 2019, covering a wide range of biofuels under various Harmonized System (HS) codes, according to a Moneycontrol report.

Government Push for Domestic Blending Targets

The Indian government has been aggressively pursuing its ethanol blending goals. As per a report by Moneycontrol, the policy aims to reduce import dependence on fossil fuels and boost domestic sugar and grain-based ethanol production.

On March 20, Minister of State for Petroleum Suresh Gopi informed Parliament that the country aims to achieve 20% ethanol blending in petrol by 2030. As of February 2025, blending had reached nearly 18%, up from 10% in 2022.

Sector Impact and Key Players

India’s ethanol strategy has put the spotlight on companies in the sugar and biofuel sectors. Firms such as Praj Industries, Balrampur Chini, Bajaj Hindustan Sugar, and Dalmia Bharat are expected to benefit from the expanding domestic ethanol programme.

The initiative for 20% ethanol-blended petrol was launched in 2023, initially covering 15 cities. The use of ethanol, extracted from sugarcane, broken rice, and other agricultural produce, is expected to reduce India’s dependence on oil imports, according to an Economic Times report. The blending initiative, which began as a pilot project in 2001, has now become a core part of India’s energy roadmap.

Licensing and Import Restrictions

While domestic production is promoted, the import side remains tightly controlled. Ethanol imports for industrial and non-fuel purposes are only allowed through special licensing to “actual users,” making it difficult for foreign suppliers to tap into the Indian market.

This restricted access is what prompted the USTR to label India’s ethanol policy as a trade barrier. The Commerce Ministry’s licensing requirement for biofuels underlines the government’s intent to support local industry, though it has now become a source of international friction.

Conclusion

India’s ethanol import restrictions have drawn criticism from U.S. trade officials at a time of heightened global scrutiny of protectionist policies. As New Delhi pushes ahead with its blending targets to reduce fossil fuel reliance, it faces mounting pressure from global partners like the U.S. to ease trade barriers. The evolving ethanol policy will be closely watched by both domestic players and international stakeholders in the months ahead.

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