By: Bharat Daily Samachar Date: 24 Sep,2025

India’s ethanol blending program has received fresh momentum as the government announced an increase in the procurement price of rice-based ethanol supplied through the Food Corporation of India (FCI). The revision, applicable for the Ethanol Supply Year (ESY) 2025-26, reflects India’s growing push toward energy security, reduced oil imports, and the promotion of clean fuels.

This move is not just about revising prices—it is a clear signal that ethanol will play a pivotal role in shaping India’s future energy roadmap.

What the Price Hike Means

The government’s decision to raise the price of FCI rice-based ethanol is aimed at ensuring that ethanol producers remain financially viable and motivated to expand production capacity. The cost of raw materials, operational expenses, and rising demand for alternative fuels all factored into this hike.

While the exact price revision depends on the notification, the increase is expected to give sugar mills, grain processors, and distilleries stronger incentives to supply ethanol under the government’s blending program. The ethanol supplied from FCI’s surplus rice stock will now fetch a better return for producers, ensuring a steady supply for India’s ambitious ethanol blending targets.

India’s Ethanol Blending Target

India currently blends about 12% ethanol with petrol and has set a goal of achieving 20% blending by 2025-26. This target, known as E20, is considered crucial for reducing India’s dependency on crude oil imports, which account for a significant chunk of the country’s trade deficit.

By encouraging ethanol production from diverse feedstocks like sugarcane, maize, and surplus FCI rice, the government is widening the supply base. This not only helps in cutting import bills but also supports farmers by creating a steady demand for agricultural produce.

Why Rice-Based Ethanol Matters

While sugarcane remains the dominant raw material for ethanol production, rice-based ethanol offers a significant advantage. Surplus rice procured by FCI often goes unused or is stored at high costs. By diverting this stock toward ethanol production, India addresses two issues at once: reducing food grain wastage and boosting renewable energy output.

Moreover, rice-based ethanol ensures that ethanol supply does not remain over-dependent on sugarcane harvests, which are highly vulnerable to monsoon fluctuations. Diversification makes the ethanol blending program more sustainable in the long term.

Benefits of the Price Revision

1. Support for Distilleries and Producers – Higher procurement prices will encourage ethanol producers to increase output without worrying about cost viability.

2. Stronger Push Toward Energy Security – As more ethanol enters the supply chain, India can cut down on costly fuel imports.

3. Boost to Farmers – Consistent demand for rice and other feedstocks will provide farmers with an additional source of income.

4. Environment-Friendly Fuel – Ethanol-blended petrol reduces carbon emissions and helps India in meeting climate commitments.

Concerns and Criticism

While the ethanol push is seen as a step in the right direction, critics argue that diverting rice from FCI stocks could impact food security, especially for India’s poor who rely on the Public Distribution System (PDS). There are also questions about whether using food grains for fuel is the right approach when the global community often debates “food versus fuel” policies.

However, the government has clarified that only surplus and non-consumable rice stock is being diverted for ethanol production, ensuring that PDS commitments remain unaffected.

Impact on Global Energy Strategy

The revision of ethanol prices also ties into India’s global positioning. With climate change concerns on the rise, renewable energy is becoming a priority worldwide. Ethanol, being a cleaner and renewable fuel, allows India to position itself as a responsible energy consumer and producer.

Additionally, the ethanol blending program reduces vulnerability to global oil price shocks. For a country that imports more than 80% of its crude oil needs, this is a vital shield for economic stability.

Industry Response

The ethanol industry has welcomed the government’s decision, stating that the price increase will improve the financial health of producers. Many distilleries have been struggling with cost pressures, and the revision will give them room to expand operations, invest in technology, and meet the growing demand for ethanol.

Experts believe that this move will accelerate investments in grain-based ethanol plants, a sector that has already been witnessing interest due to government subsidies and policy support.

Looking Ahead

India’s ethanol journey is just beginning. With a firm commitment to blending targets, the country is investing heavily in infrastructure, including setting up new distilleries, expanding grain-based ethanol plants, and strengthening supply chains.

The latest price hike for rice-based ethanol from FCI is a small but significant step in this direction. If implemented effectively, it could help India strike a balance between farmer welfare, industrial growth, energy security, and environmental sustainability.

Conclusion

The government’s decision to raise the price of rice-based ethanol for the 2025-26 supply year goes beyond economics—it reflects a larger vision for a greener, more self-reliant India. By turning surplus food grains into renewable fuel, the country is redefining how agriculture, energy, and sustainability can work together.

For India, every drop of ethanol produced and blended into petrol represents more than just fuel—it symbolizes reduced dependence on imports, better opportunities for farmers, cleaner air, and a stronger step toward energy independence.