Rio De Janeiro - Brazil has extended an offer to share its ethanol manufacturing technology with India as a potential solution to their long-standing disputes over the sugar industry.

The proposal for technology sharing emerged following a series of ministerial conferences and formal negotiations between the two nations. This offer of ethanol technology has the potential to play a pivotal role in resolving the disagreements, especially since India is eager to accelerate the adoption of biofuels for both standalone transportation use and blending with conventional petroleum-based fuels.

An unnamed official was quoted as saying, "Brazil is saying they will share with us technology for ethanol production. It is a positive thing. We should be able to get a good outcome (in talks)." However, details about India's proposal during the negotiations were not disclosed.

Brazil holds a significant position in ethanol production, with a strong emphasis on sugarcane-based ethanol. It has achieved a remarkable 25 percent ethanol blend in gasoline, making it a global leader in ethanol-enriched gasoline. The country has also embraced flex-fuel vehicles, which can run on either gasoline or ethanol, capturing 83 percent of new light vehicle sales in 2022.

India, on the other hand, has ambitious plans to increase its current 10 percent ethanol blend to 20 percent by FY 26, with ongoing tests involving ethanol-diesel blends. Additionally, India is leading the Global Alliance, an initiative launched during the G-20 Summit in collaboration with the US, Brazil, Argentina, Italy, Singapore, the United Arab Emirates, Mauritius, and Bangladesh, with the participation of Prime Minister Narendra Modi.

Major automakers are already offering flex-fuel vehicles in India, and Toyota recently introduced the first electric flex-fuel vehicle manufactured in the country, emphasizing India's commitment to ethanol and alternative fuels.

The Indian government's push for ethanol aligns with its objectives of increasing agricultural income, reducing reliance on imported crude oil for transportation, and contributing to the decarbonization of the transportation sector. Ethanol production has the potential to boost the income of sugarcane farmers by approximately 15 percent, alleviating the pressure on sugar prices. Furthermore, it enhances the financial stability and profitability of sugarcane processors.

The India-Brazil sugar dispute holds significant importance as it involves two major players in the global sugar industry. The resolution of this conflict could have far-reaching implications for the world sugar market.

The India-Brazil sugar dispute dates back to 2005 when India raised concerns with the World Trade Organization (WTO) regarding Brazil's sugar subsidies, alleging adverse effects on Indian sugar farmers and market distortions globally. Following a WTO ruling in India's favor, Brazil was required to reduce its sugar subsidies.

Despite this, the dispute has endured, with both countries accusing each other of WTO violations. In 2019, Brazil challenged India's support programs for sugarcane farmers and sugar export subsidies, alleging violations of the WTO's Agriculture Agreement (AoA).

A WTO Dispute Settlement Panel issued a report in December 2021, following Brazil's complaint, stating that India's support for sugarcane producers between 2014-15 and 2018-19 exceeded the permissible limit of 10 percent of the total production value, in violation of AoA provisions. Costa Rica and Guatemala subsequently sought to join the dispute, with other nations participating as third parties.

India has contested the panel's decision but given the current inactivity of the WTO's Appellate Body, efforts are underway to resolve the dispute through bilateral means.