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Ethanol-only vehicles soon

Ethanol-only vehicles soon
Highlights

India will soon allow automakers to manufacture vehicles that can run entirely on ethanol, but adoption is likely to be slow as the country has not been able to source the sugarcane by-product even for its current low gasoline-blending targets.

New Delhi: India will soon allow automakers to manufacture vehicles that can run entirely on ethanol, but adoption is likely to be slow as the country has not been able to source the sugarcane by-product even for its current low gasoline-blending targets.

Union Transport Minister Nitin Gadkari's announcement to push the cleaner-burning fuel came on the day the Supreme Court of India slapped a temporary ban on the sale of big diesel cars in the world's most polluted city, New Delhi.

"Ethanol is the next big thing and Brazil has already shown the way in terms of running vehicles on the biofuel," Gadkari told a conference of sugar mills. "The step will not only reduce our dependence on crude oil imports but also help reduce pollution."

The ethanol vehicles will have the flexibility to switch to other fuels, the minister said, adding that more details would be available by Jan. 26.

Shares of Indian ethanol maker Praj Industries jumped more than 13 percent to their highest in about two months in a flat Mumbai market on the news.

Car makers, however, believe the country does not have the infrastructure to launch ethanol-only vehicles. India does not allow imports of ethanol and sugar companies prefer to sell the biofuel to better-paying liquor companies. "It is very far-fetched ... you can't expect global carmakers to start working on that just for you," said Deepesh Rathore, director at consultancy Emerging Market Automotive Advisors. "Blend is fine, because there are other countries which are running on that. Up to a 20 per cent blend is a practical solution."

Another reason oil companies find it hard to source ethanol cheaply is the high state duty it attracts because of its use in the heavily taxed liquor industry.

By:Mayank Bhardwaj

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