The Indian government plans to increase the ethanol blend in petrol to 22.5%, the Press Trust of India (PTI) reported on Friday, citing Nitin Gadkari, minister for road transport and highways.

The biofuel blend in diesel is to be lifted to 15%.

Speaking on the sidelines of an event, Gadkari said that a new policy on non-conventional energy resources would be formulated at a meeting this week with the ministers responsible for petroleum, rural development, agriculture and environment. He was cited as saying that producing second-generation ethanol from bamboo or straw, for instance, would create significant employment and economic opportunities.

Higher ethanol use and production could reduce India's huge bill for crude oil imports, Gadkari said, adding that the government was ready to buy all of the ethanol produced by the industry.

At the end of June, a report submitted to the US Department of Agriculture's (USDA) Global Agriculture Information Network, estimated that fuel ethanol will achieve 2% blending rate in India next year, compared to 1.9% in 2016.