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India's state fuel retailers have raised purchase prices for ethanol made from C-heavy molasses by 6.87 rupees per litre, the oil ministry said on Friday on social media platform X.

The new purchase price of 56.28 rupees per litre is aimed at boosting production of ethanol, which is used for blending with petrol. Ethanol makes um more than 10% of petrol sold in India is ethanol and the government aims to raise blending to 20% by 2025.

Earlier this year, the government directed sugar mills not to use cane juice or syrup to produce ethanol, as New Delhi tried to increase sugar supplies by curtailing ethanol output.

The government allowed mills to produce ethanol only from C-heavy molasses, a cane by-product that has hardly any sugar content left in it.

India, the world's third biggest oil importer and consumer, is keen to cut its carbon footprint to meet its 2070 net carbon goal.

The Indian Sugar Mills Association, a producers' body, last month said India's sugar production was likely to fall to 32.5 million metric tons in the 2023/24 marketing year started on Oct. 1, down from its previous estimate of 33.7 million tons.

In 2022/23 marketing year, India is estimated to have produced 36.6 million tonnes of sugar.