More Stories

Informist, Friday, Feb. 6, 2026

 

By Afra Abubacker

 

NEW DELHI – The government's push to divert part of its surplus rice from the godowns of Food Corp. of India for ethanol production has seen only moderate traction, with distilleries lifting only 64% of rice allocated for the first quarter (Nov-Jan) in the 2025-26 ethanol supply year ending in October. 

 

For the first quarter that ended in January, oil marketing companies placed orders for supply of 780 million litres of ethanol to be produced from 1.74 million tonnes of FCI rice. However, distilleries lifted only 64% or 1.12 million tonnes of rice from FCI, according to industry data accessed by Informist. For the full year ending October, the government has earmarked 5.20 million tonnes of FCI rice for ethanol production. 

 

Distilleries in many states did not enthusiastically lift FCI rice for ethanol production in the January quarter. "The lifting (of FCI rice) has been quite uneven across states," an official from All India Distillers' Association said. "Uttar Pradesh is performing relatively better, with lifting over 86%. While states such as Rajasthan are lagging at 22%," the official added.

 

Meanwhile, major rice-producing states such as Chhattisgarh, Telangana, and Odisha registered lifting of only 40-50% of their allocations, indicating lower reliance on FCI supplies amid easier availability of the grain and other feedstocks in markets. 

 

In Karnataka, a major maize and rice producer, distillers lifted only 32% of the allocated FCI rice. In Maharashtra, a key sugarcane producer, rice purchases from FCI were around 50% of the allocation.

 

According to industry experts, the regional variations are largely driven by feedstock price differentials. Market prices of alternative feedstocks such as maize and broken rice were more attractive than FCI rice.

 

While FCI rice for ethanol production costs INR 2,320 per 100 kg, maize was available in key markets such as Karnataka and Madhya Pradesh around INR 1,700-INR 1,950 per 100 kg in the last few months. Prices are expected to remain under pressure with rabi maize arrivals. Maize production is expected to rise to 50 million tonnes in the crop year 2025-26 (Jul-Jun) from an estimated 43 million tonnes in 2024-25, mainly driven by improved productivity and increased demand from the ethanol sector, Indian Institute of Maize Research Director Hanuman Sahay Jat told Informist earlier.

 

Among feedstocks, maize-based ethanol fetches the highest prices, reflecting the government's push to promote maize for ethanol production. Maize is a round-year crop, and unlike rice and sugar, it has relatively lower direct human consumption.

 

Despite rice offering higher ethanol yields, around 450 litres per tonne, against 380 litres per tonne from maize, distillers often prefer to produce ethanol from maize due to better realizations. Oil marketing companies procure maize-based ethanol at INR 71.86 per litre, compared with INR 60.32 per litre for ethanol made from FCI rice. This cost-benefit works out in favour of maize.

 

According to C.K. Jain, president of Grain Ethanol Manufacturers Association, ethanol production from FCI rice has fallen below expectations. "There is a shortfall of 280 million litres of ethanol made from FCI rice in the first quarter," he said. Oil companies had given orders for 780 million litres of ethanol to be produced from FCI rice and supplied in the January quarter. The shortfall appears to be company-specific, Jain said. Some distilleries appear to have supplied more ethanol produced from other feedstocks instead of FCI rice, he added.

 

"The godown price of FCI rice is around INR 2,320 per 100 kg, and by the time it reaches plants after transportation, loading, and processing, it costs around INR 2,475 per 100 kg. That adds INR 2–INR 3 per litre to production costs, leaving thin margins," Jain had said earlier.

 

In addition, producing ethanol from FCI rice requires more working capital, around 60–65 days of funding, compared with 25 days for market-purchased feedstocks like maize. This raises financing costs and slows the operations of distilleries.

 

With distilleries mandated to use FCI rice for ethanol production and oil companies issuing ethanol supply orders early this year, industry experts and government officials had expected distilleries to actively lift rice from FCI godowns. For the entire ethanol supply year ending October, oil marketing companies have placed ethanol supply orders of 2.33 billion litres to be made from 5.2 million tonnes of FCI rice.

 

Under the ethanol blending programme, oil marketing companies buy ethanol from distilleries across the country to blend it with petrol. So far, India has achieved 20% ethanol blending in petrol in 2025-26 (Nov-Oct).

 

Asked if the supply gap in the January quarter is likely to be bridged in the coming quarters, Jain said it appears challenging. "It does not look like they will be able to carry forward these supply commitments. Some may prefer to pay the penalty," he said. 

 

As of Jan. 1, FCI's rice stocks were 6.3% higher on year at 30.9 million tonnes, the highest level for the month in over a decade. With more stocks expected to arrive from rabi and kharif procurements later in the year, the pace of diversion to ethanol will remain critical to the government's efforts to manage its surplus rice stocks.

 

Following is the state-wise data of FCI rice allocation for ethanol production during Nov-Jan, and distilleries' offtake against the allocation, compiled by industry bodies:

 

State	Allocated FCI rice	Lifted FCI rice	offtake %
Uttar Pradesh	212,186	182,859	86.2
Haryana	160,941	115,170	71.6
Madhya Pradesh	149,489	96,289	64.4
Punjab	145,322	100,496	69.2
West Bengal	140,722	103,342	73.4
Andhra Pradesh	120,999	74,456	61.5
Bihar	108,856	76,461	70.2
Telangana	103,675	44,534	42.9
Gujarat	83,927	47,048	56.1
Chhattisgarh	79,844	40,217	50.4
Assam	76,373	57,598	75.4
Jharkhand	73,801	62,230	84.3
Odisha	73,397	30,921	42.1
Uttarakhand	44,415	16,645	7.5
Rajasthan	40,762	8,959	21.9
Karnataka	36,611	11,837	32.3
Tamil Nadu	35,823	23,080	64.4
Maharashtra	29,405	14,692	49.9
Himachal Pradesh	20,994	12,652	60.3
Jammu & Kashmir	4,107	0	0
Total	1,741,649	1,119,486	64.3

 

End

 

Edited by Akul Nishant Akhoury

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd. by NSE Data & Analytics Ltd., a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt. Ltd.

 

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2026. All rights reserved.