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Promoting Brazilian Ethanol Exports to India is a Major Aim of Brazil

Chander Mohan
Chander Mohan

Agribusiness is the most immediate & obvious opportunity. Complementary growing seasons and sizeable internal markets make India and Brazil ideally suited for partnerships in agriculture. India-based Shree Renuka Sugars is leveraging year-round sugar crushing in both nationa to become one of the largest global sugar producers. Promoting Brazilian ethanol exports to India will be the main aim of President Bolsonaro. In exchange, Brazil is poised to help farmers in the country to implement a more efficient ethanol programme that reduces reliance on subsidies & helps improve urban India’s air quality.

The Brazilian government discussed ways to help India in boosting its ethanol program, such as increasing production and blending it with gasoline, which could help cut sugar stocks in the Asian country and enhance global prices for the sweetener.

"India could have large economic and environmental benefits boosting its ethanol program," said Unica's head Gussi, who came with Bolsonaro.

According to Unica's head, an increase in production and blending of ethanol in India would reduce the need for the government to subsidize the sugar sector and also reduce its oil and gasoline import bills.

He said larger ethanol blending in gasoline could as well help reduce pollution in large cities, a critical problem in India.

The state of Sao Paulo, the largest domestic producer of cane, is expected to see a production decline of 2.8% to 323.42 million mt in 2019-20.

Sugar production is expected to increase to 34.1 million mt, up 17.4% from the previous harvest.

"Although sugar is recovering, the trend is that the market is still more attractive for ethanol, mainly because of the large amount of sugar in the market," Guilherme Bastos, director of agricultural policy and information at Conab

Unica estimates that ethanol use in Brazil   in 2019 will lead to total emissions reductions of 80 million tonnes of carbon. Brazil blends gasoline with 27 percent  of ethanol, and 90 percent  of the car fleet can run on 100 percent  hydrous ethanol due to flex engines.

"India could sharply reduce pollution with ethanol. It is a low hanging fruit for them," he said.

Gussi said that Unica will promote a road show in February to promote ethanol in other Asian countries such as Thailand, China and Pakistan.

Beyond ethanol, opportunities abound in clean energy. Despite scepticism in both over the costs that developing countries may have to bear to combat climate change, Modi and Bolsonaro have set laudable goals for expanding the use of solar power. Each could benefit from a cross-fertilization of investment in solar power.

Changing trade policies are also creating momentum for collaboration. Brazil under Bolsonaro is turning its back on protectionism and forging new trade alliances. This shift, dovetailing with India’s withdrawal from Asia’s Regional Comprehensive Economic Partnership, opens a pathway for a new India-Brazil trade framework. Preferential treatment for each country’s goods would benefit the large multinationals in São Paulo and Mumbai, as well as small and medium-sized firms in Belo Horizonte and Curitiba, Hyderabad and Chandigarh.

Many of these small and medium-sized firms are providing innovative solutions to meet the demands of the middle classes in both countries. These firms are reshaping access to financial products and services through digital payments, microinsurance and online banking, to the benefit of entrepreneurs and small business owners.

Brazil and India are overdue for realizing the potential that exists between these formidable nations.

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