India brings forward by two years 20% ethanol blend to gasoline

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(Reuters) - India's government will bring forward to 2023 from 2025 the possibility of fuel companies selling gasoline containing up to 20% of ethanol (E20), according to brokers and a publication in the country's official gazette on Wednesday.

It is the second time India's government anticipates sales of the E20 fuel, which originally would happen only in 2030, as the country seeks to cut its oil import bill and reduce carbon dioxide pollution in cities.

"The central government hereby directs that the oil companies shall sell ethanol blended petrol with percentage of ethanol up to 20% as per the Bureau of Indian Standards specifications, in the whole of the states and union territories," the publication said.

The move from India towards higher production and use of ethanol is expected to cut the country's exportable surplus of sugar, potentially leading to higher international prices for the sweetener.

Most of the additional ethanol production in the country will come from sugar cane processing, so less cane will likely be used to make sugar.

Wednesday's publication comes after changes earlier this week by the government on rules for companies to set up standalone ethanol production units, aiming to facilitate those projects.

India has also been giving soft loans to sugar mills to increase ethanol production capacity by adding distillation infrastructure to existing plants.

Large volumes of E20 by 2023, however, will depend on how quick car manufacturers can adapt, since it will require new engine specifications.

(Reporting by Marcelo Teixeira; additional reporting by Rajendra Jadhav in New Delhi)

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