In a bid to resolve a sugar-related dispute at the World Trade Organisation (WTO), Brazil has extended an olive branch to India by proposing to share its advanced ethanol production technology. The South American nation suggests that this technology could assist India in utilizing its surplus sugar for ethanol production, potentially easing competition in the global sugar market.
Brazil, renowned as the world’s leading producer of sugarcane, ethanol, and the largest global exporter of sugar, holds cutting-edge technology for ethanol production. India, the second-largest sugar producer globally, could benefit from Brazil’s expertise as it seeks to increase the percentage of ethanol blending in auto fuels, gradually reducing reliance on imported crude oil.
The proposed technology, known for its flexibility, allows for ethanol blending, offering India a solution to address its fuel-related challenges. Brazil contends that India could utilize surplus sugar for ethanol production, preventing excess sugar from affecting global markets and impacting world prices.
Discussions are underway regarding Brazil’s proposal, which aligns with India’s goal of achieving 20% ethanol blending with petrol by 2025. Ethanol, derived from sugarcane and other agricultural produce, aids in reducing carbon emissions and lessens dependence on foreign oil, crucial for India, which imports 85% of its oil needs.
The WTO dispute originated in 2019 when Brazil, Australia, and Guatemala alleged that India’s support measures, including Fair and Remunerative Price (FRP) for sugarcane farmers, violated global trade rules. A WTO dispute settlement panel ruled against India in December 2021, leading to an appeal by India in January 2022. However, the appellate body’s dysfunction, arising from disputes over member appointments, hampers the resolution process.
While the trade gap remains in favor of India, bilateral trade between India and Brazil surged to USD 16.6 billion in 2022-23, compared to USD 12.2 billion in the previous fiscal year. Reports indicate that Brazil has achieved a notable 25% blending level in ethanol-blended gasoline, positioning it as a leader in the field.
