The Indian government has clarified its policy on diverting surplus rice from the Food Corporation of India (FCI) for ethanol production, asserting that such allocations occur only after ensuring national food security and maintaining buffer stock norms. This statement comes in response to parliamentary inquiries regarding the impact of the ethanol blending program on food inflation.
Surplus Rice Utilized for Ethanol Program
As of June 30, 2026, during the current ethanol supply year (ESY 2025-26), the Ministry of Consumer Affairs, Food and Public Distribution reported that 44.2 lakh metric tonnes (LMT) of surplus rice from the Central Pool was supplied to distilleries. This diversion is managed under the Open Market Sale Scheme (Domestic) and strictly follows the fulfillment of obligations under the National Food Security Act (NFSA) and other welfare schemes.
Officials firmly rejected claims that this diversion contributes to food inflation, stating that only accumulated excess stocks are allocated for ethanol production, leaving retail food prices unaffected.
Diversification of Feedstocks and Maize’s Growing Role
The government highlighted its strategy to broaden the range of feedstocks for ethanol production, which now includes sugarcane juice, B-heavy molasses, C-heavy molasses, maize, damaged foodgrains, and surplus FCI rice. This multi-feedstock approach aims to reduce dependence on any single crop, thereby supporting agricultural diversification and enhancing the program's resilience.
Maize has emerged as a significant component in India's ethanol blending efforts. Its usage for ethanol production saw a sharp increase from 75.4 LMT in ESY 2023-24 to 131.1 LMT in ESY 2024-25. In the current supply year, 67.9 LMT of maize had been used for ethanol production by June 30. India's estimated maize production of 550 LMT in 2025-26 is deemed sufficient to meet the demands of both ethanol production and other critical industries like poultry and cattle feed.
Flexible Allocation Policy
Regarding potential caps on foodgrain use for ethanol during periods of high inflation or low buffer stocks, the government stated that no fixed ceiling is prescribed. Instead, allocations are dynamic, based on stock availability after all food security commitments are met. This flexible approach allows the government to respond to evolving stock levels and market conditions.
It was noted that the supply of FCI rice for ethanol production was temporarily halted from August 14, 2023, due to food security considerations. However, allocations resumed during ESY 2024-25 and ESY 2025-26 once surplus stocks became available, demonstrating the government's adaptive management of grain reserves.