The Indian cabinet has approved a national biofuel policy that is likely set a higher blending target.
Details of the policy have not been announced but it has been reported that the government will mandate 20% ethanol or biodiesel blended petrol by 2017. Currently, the country has 5% ethanol blending which would rise to 10% from next month.
Experts have already started questioning the wisdom of the new policy. Will enough land be available for biofuel crops such as jatropha? And what implications would this policy have on India's food production?
Higher use of biofuels will intensify the debate on the use of farmland for fuel in India, and encourage farmers to reduce grain cultivation for food, says TK Bhaumik, an economist with Assocham, a leading business chamber.
"Land is not elastic. If there is more pressure to grow oilseeds or corn to derive biofuels and farmers get a good price for them, they will obviously neglect grain production," he adds.