Brazil and India Government are Likely to Discuss for Boosting Ethanol Trade

Brazil and India government are expected to sign a memorandum of understanding on production and trade of ethanol, which the leaders of the two countries will meet in Brasilia at later this year.

Jair Bolsonaro, Brazilian President posted messages on Twitter for congratulating Narendra Modi, Indian Prime Minister about election in May, and expressing intentions to boost ties with India, particularly in trade which Modi Narendra and Jair Bolsonaro, have later met during the G20 summit in Osaka, Japan at the end of June.

According to UDOP, a Brazilian association of sugar and ethanol producers, the suggestion to discuss a partnership on ethanol came from the Indian government, which has a target to gradually increase blending of ethanol to gasoline to up to 20%.

Although, there is a positive signal for November’s meeting, but it is known that Brazil is fighting India in the World Trade Organization because of sugar export subsidies. India has surpassed Brazil as the world’s largest sugar producer as it gives financial help to cane producers and sugar mills, a stimulus that is hampering a potential price recovery in the depressed global sugar market.

Brazil, is the second largest ethanol maker after the United States, has been doing for the last two seasons with cane allocation to sugar production hitting a record low of 35% in 2018-19. A being trade with India, and using more cane in India to produce ethanol, instead of sugar, could reduce the global supply of the sweetener.

Therefore, UDOP said, citing information from the energy department in Brazil’s foreign relations ministry, that Bolsonaro’s government plans to help India to boost ethanol production and open the Indian market for the biofuel, helping to expand global use of ethanol, and help reduce surplus sugar in India