Govt hikes rice allocation for ethanol to 52 lakh tonnes
The Centre has approved 52 lakh tonnes of FCI rice for ethanol production in 2024–25, enabling distilleries to produce 245 crore litres of ethanol. With a fixed price of ₹22.50/kg, the subsidy burden is estimated at ₹10,000 crore. Despite allocations, actual lifting remains below 10 lt. Ethanol blending has already crossed 18.5% for ESY 2024–25.
The Centre has approved an extra 28 lakh tonnes (lt) of rice for the ethanol programme, in addition to the 24 lt allocated earlier, bringing the total allocation to 52 lt for the 2024–25 ethanol supply year, which began in November 2024. However, the issue price of ethanol remains unchanged at ₹22.50 per kg.
While the Food Corporation of India (FCI) has allocated entire 24 lt of rice to distilleries, the ethanol producers have so far lifted less than 10 lt.
“The competent authority has approved the allocation of FCI rice to distilleries for ethanol production at the reserve price of ₹22.50/kg (fixed) for a total quantity not exceeding 52 lt (24 lt already allocated and additional allocation of 28 lt) during ESY 2024-25 (November 1, 2024 to October 31, 2025),” the Food Minister said in an office memorandum issued last week.
The decision has been taken considering the requirement of feedstocks and their availability vis-a-vis what could be produced from FCI rice.
Distilleries may gain
Assuming a conversion rate of 470 litres of ethanol produced from per tonne of FCI rice, distilleries can produce nearly 245 crore litres of ethanol from the 52 lt quota. The government subsidy for this is estimated to be around ₹10,000 crore.
Based on the estimated economic cost of rice at ₹41.73/kg for 2025-26, the subsidy on rice used for ethanol production will be ₹19.23/kg, given the fixed issue price of ₹22.50. Distilleries will pay ₹11,700 crore to the FCI for lifting the entire 52 lt at the issue price. Their revenue is expected to be around ₹14,300 crore by selling 245 crore litres of ethanol to oil marketing companies at the government-set price of ₹58.50 per litre.
Under the ethanol blending with petrol (EBP) programme, the government targets to achieve 18 per cent blending rate in current ethanol supply year (ESY), which will end on October 31, and 20 per cent in ESY 2025-26. But, the EBP rate was more than 18.5 per cent during November 2024-April 2025.
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Source : The Hindu Businessline
