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Informist, Friday, Oct. 31, 2025

 

By Afra Abubacker

 

NEW DELHI – India's effort to divert its surplus rice from the Food Corp. of India into ethanol has ended with modest success. With the 2024-25 supply year closing Friday, FCI sold around 3.2 million tonnes of rice, or nearly 62% of the 5.2 million tonnes earmarked for ethanol production during the year, an FCI official said. 

 

The shortfall is in line with the government's anticipation. In August, Food Secretary Sanjeev Chopra had said that the government expects distillers to lift 3.0 million tonnes by October-end. 

 

According to experts, rice offtake for ethanol production has been slow due to operational issues, including delayed rice allocation announcements and the late issuance of allotment letters. "Because we missed the first two cycles (of ethanol tenders), the allotment happened late, as a result of which the off-take has not been as per our expectation," Chopra told PTI in late August.

 

In August 2024, the government lifted the 13-month ban on the supply of FCI rice to distilleries, and since then, it has allocated more rice for ethanol production. With rice stocks piling up in its godowns, the government expanded the rice allocation for ethanol to 5.2 million tonnes in May, adding 2.8 million tonnes to the earlier 2.4 million tonnes quota set in January. 

 

As of Oct. 1, rice stocks in the central pool were at a two-decade high for the month at 35.6 million tonnes, up 15% on year. Stocks had piled up due to the government's open-ended procurement policy and state-level bonuses above the minimum support price.

 

By the time the government had raised rice allocation to 5.2 million tonnes in May, half of the ethanol supply year had already passed. Since the ethanol year begins in November, oil marketing companies had already floated two tenders by January, based on the smaller 2.4 million tonne rice quota. By February, allotment letters were issued, and distillers had begun lifting rice from FCI godowns. 

 

A tender in June and July accounted for the expanded rice allocation, but procedural delays and logistical hurdles slowed distillers' rice purchases. Nevertheless, experts consider the final rice sales "good", given the staggered rollout. "Selling 3.2 million tonnes is a good achievement, considering that allocations did not happen in one go," G.K. Sood, chairman, MEIR Commodities, said. 

 

Outlook for 2025-26

For the upcoming 2025-26 (Nov-Oct) supply year, rice offtake is expected to be robust. Although distillers continue to prefer maize as the most profitable feedstock for ethanol production, the government's mandate requiring a minimum 40% share of grain-based ethanol should come from FCI rice will likely ensure higher use of rice in the biofuel feed basket next year.

 

"Quantity offered from surplus rice sourced from FCI should be a minimum of 40% of the total quantity offered from grain-based feedstock," Bharat Petroleum Corp. Ltd. said in its tender. 

 

For the 2025-26 ethanol year beginning Saturday, the government has allocated 5.2 million tonnes of rice, in line with 2024-25. Unlike earlier, the government's allocation has been timely, and oil marketing companies have not only accounted for the availability of more FCI rice but also mandated its use in grain-based feedstocks.

 

To promote rice-based ethanol, the government also hiked the procurement price of ethanol made from FCI rice to INR 60.32 per litre from INR 58.50 per litre, while maize-based ethanol continues to fetch the highest rate at INR 71.86 per litre. 

 

The 5.2 million tonnes of rice can yield about 2.34 billion litres of ethanol, and oil companies have placed orders for 2.33 billion litres. According to Sood, distilleries will take all the allocated rice from FCI next year. End

 

Edited by Saji George Titus

 

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