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Informist, Monday, Oct. 13, 2025

 

By Afra Abubacker 

 

NEW DELHI – As the 2024–25 ethanol supply year draws to a close this month, India's progress in converting surplus rice into biofuel production remains slow. The Food Corp. of India has so far sold only around 2.8 million tonnes of rice, or about 54%, of the 5.2 million tonnes earmarked for ethanol production this year.

 

The government has been encouraging the diversion of rice for ethanol manufacturing to liquidate surplus stocks lying in its godowns. However, rice offtake remains slow, with just two weeks left for distillers to complete their purchases. "We expect rice sales for ethanol production to end at 2.9 million tonnes," an FCI official said.

 

Experts attribute the weak offtake to procedural delays, including late allocation announcements and the slow issuance of allotment letters by oil marketing companies, which left distillers with limited time to lift stock. Despite the subdued pace this year, rice offtake for ethanol production is likely to improve in the next supply year starting in November. 

 

Though distillers continue to favour maize as the most profitable feedstock for ethanol production, the government's mandate requiring a minimum 40% share of rice-based ethanol will likely ensure higher use of rice in the biofuel feed basket.

 

To offload excess stocks, the government has mandated that at least 40% of the ethanol offered from grain-based feedstocks must be made from surplus rice bought from FCI. "Quantity offered from surplus rice sourced from FCI should be a minimum of 40% of the total quantity offered from grain-based feedstock," according to a tender issued by Bharat Petroleum Corp. Ltd. 

 

As of Sept. 1, rice stocks in the central pool were at a two-decade high for the month at 36.9 million tonnes, up over 14% on year. Stocks had piled up due to the government's open-ended procurement policy and incentives for paddy cultivation, including state-level bonuses above the minimum support price.

 

To ensure higher production of rice-based ethanol, the government has offered a higher price to distillers this time. The procurement price of ethanol made from FCI rice has been raised to INR 60.32 per litre from INR 58.50 per litre, though maize-based ethanol continues to fetch the highest rate at INR 71.86 per litre. 

 

In line with the current year, the government has allocated 5.2 million tonnes of rice to be sold to distillers in 2025-26 at a heavily subsidised rate of INR 2,320 per 100 kilograms, against the economic cost of INR 4,173.3 per 100 kg. The 5.2 million tonnes of rice allocated can yield 2.34 billion litres of ethanol. However, distillers' bids to supply ethanol made from FCI rice totalled 3.97 billion litres, indicating their robust interest in the feed.  

 

Bids to supply FCI rice-based ethanol rose because distillers had bid heavily for maize-based ethanol, but had to ensure at least 40% of their grain-based feedstock came from FCI rice, G.K. Sood, chairman, MEIR Commodities, said. 

 

The supply offers indicate that distillers continue to favour grain-based feedstocks over sugarcane for the upcoming season. Over the past two years, the government has incentivised ethanol production towards grains such as maize and rice, which has created an additional demand for maize, prompting farmers to expand cultivation. Maize acreage has risen 12.6% to 9.5 million hectares, according to the latest data.  End

 

Edited by Saji George Titus

 

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