15 Dec 2025
New Delhi: The availability of surplus rice from the Food Corporation of India (FCI) has significantly reduced India’s dependence on maize for ethanol production, helping to stabilise maize prices despite the expanding use of grains in the biofuel programme, according to C.K. Jain, President of the Grain Ethanol Manufacturers Association (GEMA).
Speaking in an interview, Jain said higher maize output and the assured supply of FCI rice as an alternative feedstock have together prevented sharp price increases in the maize market. “If FCI rice is withdrawn from the ethanol feedstock mix, maize and other grain prices would spiral out of control,” he said, adding that the presence of subsidised rice has played a key role in containing inflationary pressures.
While ethanol production from FCI rice offers thinner margins due to lower pricing, along with higher transportation and processing costs, Jain noted that it effectively caps maize prices. Distilleries also benefit from the certainty of supply and fixed pricing of FCI rice, which helps stabilise operating costs. However, he cautioned that ethanol production using FCI rice requires significantly higher working capital. “The working capital cycle is around 60–65 days for FCI rice, compared with about 25 days for grain sourced from the open market, which substantially increases financing requirements,” he said.
Jain also raised concerns about the ethanol procurement policy of oil marketing companies (OMCs), which is designed to reduce logistics costs by sourcing ethanol closer to consumption centres. He argued that the policy may be counterproductive in environmental and economic terms. “To move one litre of ethanol, nearly 2.65 kg of grain must first be transported. When feedstock is shifted from surplus regions to deficit zones, overall transportation and carbon emissions increase across the value chain,” he said.
According to Jain, the current procurement framework has also resulted in regional imbalances and underutilisation of capacity in grain-surplus states. For the 2025–26 ethanol supply year (November–October), OMCs invited bids for 10.5 billion litres of ethanol but received offers totalling 17.7 billion litres, about 70% more than the requirement. In response, OMCs introduced additional criteria to optimise procurement on logistical grounds.
While the policy aims to encourage local sourcing, Jain said its implementation has favoured deficit regions at the expense of surplus-producing states that already have large, operational ethanol facilities. As a result, states such as Gujarat, Assam and Rajasthan received 100% allocation of their offered volumes, whereas grain-surplus states including Madhya Pradesh, Bihar and Karnataka received only about 22% of the quantities they had bid, he said.
Jain also highlighted the ongoing shift in India’s ethanol feedstock composition. For 2025–26, oil marketing companies have so far placed orders for 10.5 billion litres of ethanol, of which only around 28% will be sourced from sugar-based feedstocks. The remaining 72% is expected to come from grain-based sources, underscoring the growing role of cereals in meeting the country’s biofuel blending targets.