From shortage to surplus: India pours record rice crop into ethanol

India is redirecting record rice volumes towards ethanol production to manage its unprecedented stockpile and maintain momentum in its ethanol blending programme. The Food Corporation of India (FCI) has allocated 5.2 million metric tonnes of rice for ethanol production in the 2024-25 marketing year ending in June, nearly 9% of global rice trade and a massive jump from under 3,000 tonnes last year. This shift comes after ample monsoon rains and a bumper harvest pushed rice reserves to 59.5 million tonnes as of June 1, 2025, more than four times the government's buffer norm. With sugarcane supplies hit by last year’s drought, rice is now critical in helping India approach its 20% ethanol blending target, which reached 19.8% last month.
Industry experts say that even more rice could be diverted to ethanol next year if government incentives improve. Despite rice being sold at Rs. 22,500 (US$ 262.69) per tonne and ethanol procured at Rs. 58.5 (US$ 0.68) per litre, margins remain tight. India's record rice harvest of 146.1 million tonnes far exceeds domestic demand of 120.7 million tonnes, making surplus disposal a challenge. Exports, already projected to rise 25% to 22.5 million tonnes in 2025, offer limited relief due to India's existing 40% share in global rice trade. Analysts expect ethanol output to play an increasingly vital role in balancing grain supply and sustaining clean energy ambitions amid shifting agricultural dynamics.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.