NEW YORK: India’s government plan to increase ethanol blending in gasoline will erase the country’s exportable sugar surplus in two to three years, according to the chairman of a large Indian company in the sector.

Speaking during the Santander ISO Datagro New York Sugar & Ethanol Conference on Tuesday, Samir Somaiya, the chairman of Godavari Biorefineries, said government measures such as higher reference prices for sugar cane and ethanol will change production strategies at plants.

“The industry is actively responding to those policies, and there is no doubt biofuel production in India will increase,” Somaiya said during a presentation at the conference. Sugar production, as a result, should decrease, he added.

Indian subsidized sugar exports are seen by analysts as a major factor limiting international sugar prices.

India is on route to export around 6 million tonnes of sugar in 2020/21.

The country’s government has recently changed its targets for ethanol blending in gasoline, aiming to reach 20% blending by 2025 instead of 2030 previously.

Somaiya does not see a large potential for ethanol imports from countries such as United States and Brazil, the two largest producers of the biofuel, saying the government’s target is to boost blending by increasing local production.

Another large player in Asia’s sugar sector, Thailand, should see a recovery in production in 2021/22.

Sasathorn Sanguandeekul, a senior analyst for Thailand’s Mitr Phol Sugar Corp, said during the conference that the country’s sugar cane production is seen growing to 85 million-90 million tonnes in 2021/22 from 66 million tonnes in 2020/21.

She expects sugar exports to rise next season to around 5 million or 6 million tonnes and sees Thai exports again competitive in the Indonesian market, where importers have switched to Brazilian and Indian supplies in the last two years as a result of lower Thai sugar availability.