Surplus rice inventories have allowed India the chance to remove spare rice stocks as it allocated 5.2 million metric tonnes of rice for the production of ethanol in the 2024-25 marketing year ending June, accounting for nearly 9 per cent of global rice shipments.
This is a marked increase from less than 3,000 tonnes of rice that went into ethanol in 2023-24 by the state-run Food Corporation of India (FCI).
The FCI buys nearly half of the country’s rice crop, keeping ample for consumption, which is its priority. This year’s reserves total 59.5 million metric tonnes, as on June 1, including un-milled paddy. The amount of stock far outweighs the government’s target of 13.5 million tonnes for July 1.
The country harvested a record 146.1 million tons of rice crop this year ending in June, far surpassing local demand of 120.7 million tons, according the Food and Agriculture Organization.
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With the rice stock expected to increase further as new season’s crop arrives, India can keep its ethanol blending programme on track.
Grain-based distilleries convert corn, rice, and damaged food grains to ethanol. With there being rice export curbs in place for the last two years, more corn had to be used to create the spirit, leading to hike in price of corn.
It was only in March this year that India removed the last of almost two years of restrictions on rice exports, which had been placed prompted by poor rains that cut production.
Now that export curbs have been removed, the country has been aggressively exporting rice to countries including Thailand and Vietnam. Exports are expected to touch nearly 25 per cent in 2025 calendar year, totalling 22.5 million tonnes.
India is the world’s biggest producer and exporter of rice, accounting for 40 per cent of global rice shipments.
It is also the world’s third-largest oil importer and consumer of petroleum products.
Last month, India nearly hit its target of blending ethanol into gasoline to 20 per cent when it reached 19.8 per cent ethanol production. Last year, India's gasoline included 14.6 per cent ethanol.
This target had seemed impossible to reach when rice export curbs had led to the use of sugarcane to produce ethanol, which too had run into shortages because of drought in 2023, forcing the world's biggest consumer of the sweetener to sharply decrease diversion of sugar for ethanol.
In the near future, if rice stocks continue to rise, the government may lower rice prices or increase the buying price of ethanol, said Arushi Jain, joint secretary at the Grain Ethanol Manufacturers Association.
Akshay Modi, managing director at Modi Naturals Limited, a manufacturer of ethanol, informed that there might not be enough margin now to ramp-up rice-based ethanol production any further.” The FCI is selling rice at 22,500 Indian rupees ($262.19) per tonne, while oil marketing companies are procuring rice-based ethanol at 58.5 rupees per litre,” he said.
"The government's going to have a hard time offloading all that rice they bought from farmers," said Himanshu Agrawal, executive director at Satyam Balajee, a rice exporting firm.
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