India targets 20 pct biofuel blending by 2017

NEW DELHI, Sept 11 (Reuters) - India's cabinet on Thursday approved a new biofuel policy which aims to raise the blending of biofuels with petrol and diesel to 20 percent by 2017, a government statement said.

Ministers had differed over subsidies for biodiesel, obstructing progress on a new policy for the sector. Ethanol is already being mixed with petrol in India.

Domestic oil retailers are required to mix ethanol with petrol to 5 percent of volume almost nationwide and India plans to double that to 10 percent from October 2008, when the new sugarcane crushing season begins.

Analysts say India consumes 40 million tonnes of diesel a year, way above annual petrol demand of 8-9 million tonnes, and in 2003 announced plans to replace around five percent of its diesel consumption with biodiesel made from jatropha. (Reporting by Rajkumar Ray, Editing by Mark Williams)