We focus on grains and food industry.
We focus on grains and food industry.
We focus on grains and food industry.
We focus on grains and food industry.
We focus on grains and food industry.
We focus on grains and food industry.
We focus on grains and food industry.
We focus on grains and food industry. current time
Rice-to-Ethanol Shift Raises Questions Over Costs and Priorities
India’s rapid expansion of ethanol blending is creating a new policy dilemma: how far should foodgrain stocks be used to support the country’s fuel ambitions? The government’s Ethanol Blended Petrol programme was designed to reduce dependence on imported petroleum and strengthen energy security. But the economics of the programme have become increasingly complicated as rice from Food Corporation of India (FCI) stocks is being supplied to ethanol producers at prices well below the cost incurred in procuring, storing and transporting it.
The shift towards higher blending has been particularly rapid. Ethanol blending in petrol increased from 1.53% in 2013-14 to 19.24% in 2024-25, while production capacity expanded from about 421 crore litres in 2014 to nearly 2,000 crore litres by 2026. The country now has around 700 crore litres of surplus ethanol capacity, with 370 distilleries operating and more under construction. As grain-based production has gained importance, rice and maize have become significant feedstocks. Grain-based ethanol currently accounts for about 67% of total supply. Government data puts FCI rice at around 25% of ethanol feedstock, while maize contributes about 36%. The biggest concern is the pricing of FCI rice. During 2025-26, the procurement cost, including associated charges, stood at ₹38.89 a kg, while rice was supplied to distilleries at an average of ₹23.20 a kg. The gap amounts to nearly ₹16 a kg.
At the same time, ethanol made from FCI rice is the least expensive among major feedstocks at ₹60.32 a litre, compared with ₹65.61 from sugarcane and ₹71.86 from corn. Yet the weighted average ethanol price of ₹66.61 a litre remains above the refinery-gate price of petrol cited in the source. This leaves a difficult policy trade-off. India has built substantial ethanol capacity to reduce its oil import bill, but the programme increasingly relies on agricultural resources that also have food, land and water implications. With E20 already in place and further blending ambitions being debated, the economics of the programme deserve closer scrutiny. The central question is no longer simply how much ethanol India can produce, but whether the cost of achieving that target is justified by the benefits to consumers, farmers and taxpayers.
