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India on Wednesday increased the rates at which state-run fuel retailers must buy sugarcane-based ethanol for blending by 3% to 6% effective from Dec. 1, as it tries to promote biofuel and cut imports of costly crude oil.

The government said the higher prices would boost supplies of ethanol and help sugar companies to pay their dues to cane farmers.

The new rates for ethanol derived from "C" heavy molasses will rise to 49.41 rupees per litre from 46.66 earlier. Rates for "B" heavy molasses will increase to 60.73 rupees from 59.08, and those derived from sugarcane juice/sugar/sugar syrup to 65.61 rupees from 63.45, the government said in a statement.

The B-heavy molasses juice has some sucrose content left in them for sugar production, whereas C-heavy molasses is a cane by-product that has no sugar content left in it.

India, the world's third-biggest oil importer and consumer, wants to double ethanol blending with gasoline to 20% from 2025/26 from the current level of 10% across the country.

"All distilleries will be able to take benefit of the scheme and a large number of them are expected to supply ethanol for the ethanol blended petrol programme," the Cabinet Committee on Economic Affairs said.

"Remunerative price to ethanol suppliers will help in early payment to cane farmers, in the process contributing to minimise difficulty of sugarcane farmers."

The government fixes ethanol purchase prices for fuel retailers Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp.