After sugar became more expensive amid the ethanol push, could the rice that reaches the plates of poor and ordinary Indians also come under threat?
India is now close to achieving 20% ethanol blending in petrol. Because of this, the country is reportedly importing around 40 million fewer barrels of oil every year. Farmers benefit, and pollution is reduced. But an India Today report claims that behind this seemingly bright picture lies a complicated calculation that may not necessarily benefit farmers, taxpayers, or the ordinary person who depends on subsidized rice from the ration system. The report claims that rice meant for the poor is being sent to distilleries after being classified as unsuitable for human consumption, even though experts say the rice is perfectly edible. A large portion of the money the government spends on procuring this rice allegedly turns into a loss for the exchequer.
1. Could Rice Be the Next Food Item to Become Expensive After Sugar?
The report claims that despite all these measures, ethanol is proving more expensive than petrol made from imported crude oil. This raises a fundamental question: In the name of energy security, is India compromising its food security?
India’s ethanol blending programme, the economics of rice, sugarcane and maize, the benefits for farmers, and the real beneficiaries of the subsidies all need to be examined. The government’s argument is that India imports around 90% of its petroleum requirements. Therefore, blending ethanol into petrol can reduce the country’s dependence on imported oil and save foreign exchange.
This thinking led to the National Ethanol Blended Petrol Programme, or EBP. The original target was to achieve 20% ethanol blending in petrol by 2030, known as E20. However, the government had already developed the capacity to achieve this target five years ahead of schedule, by 2025. The problem is that around 80% of the vehicles currently on Indian roads are two wheelers, and a large number of these older vehicles were not specifically designed for E20 fuel. India’s Chief Economic Adviser, V. Anantha Nageswaran, also warned in an article published in August that India should not move beyond E20 towards higher blends such as E25 until the complete food versus fuel calculation is understood. He suggested that E10 petrol should remain available as an option for older vehicles.https://www.indiatoday.in/india/story/india-ethanol-blending-math-is-not-mathing-fci-rice-food-security-e20-petrol-2978064-2026-08-24
2. How Rice, Maize and Sugarcane Became Part of the Ethanol Economy
Ethanol was traditionally produced from molasses, including material left over from sugar production, as well as damaged or surplus rice. But maize and directly procured rice have now become important feedstocks as well.
According to Vijender Singh, president of the All India Distillers’ Association, the government has required distilleries to source at least 40% of their feedstock from surplus rice supplied by the Food Corporation of India, or FCI. The government’s argument is that this is broken rice and is therefore unsuitable for human consumption. Speaking to India Today, agricultural expert Sudhir Pawar of Lucknow University reportedly explained that the fact that rice is broken does not mean it is unfit for consumption. According to him, the nutritional value remains essentially the same; only the appearance changes.
Broken rice was previously used extensively in the Public Distribution System, or PDS. Surplus quantities were also sent to African countries as humanitarian assistance. In other words, broken rice had an established food related use.
To understand this, we need to go back several decades.
After independence, India struggled with famine and food shortages and was dependent on foreign food assistance. The Green Revolution in the 1960s dramatically increased grain production in states such as Punjab, Haryana and Uttar Pradesh, helping India become self sufficient in food grains. The National Food Security Mission was launched in 2007 08 and was later renamed the National Food Security and Nutrition Mission in 2014 15.
In 2013, the Manmohan Singh government introduced the National Food Security Act. Under the system created through this legislation, around 800 million people in India today receive subsidized food grains every month, with rice accounting for a major share. According to the India Today report, during the 2024 25 Kharif Marketing Season alone, the government spent around ₹65,695 crore on procuring paddy.
The FCI reportedly spent an average of around ₹389 per kilogram of rice equivalent cost in 2025 26, or approximately ₹39 per kilogram, after accounting for storage, transportation and other expenses. Some experts estimate the effective cost at as much as ₹44 per kilogram.
Yet this same rice is reportedly being sold to distilleries for just ₹2,320 per quintal, or approximately ₹23 per kilogram.
That creates a difference of around ₹16 per kilogram, or roughly ₹1,600 per quintal.
The difference ultimately has to be borne by taxpayers.
According to the India Today report, broken rice could previously constitute as much as 25% of the rice distributed through the Public Distribution System. The government is now moving to reduce this share to 10%, while approximately 15% could effectively become available for the ethanol distillery industry.
Food Secretary Sanjeev Chopra reportedly said in March that this change would continue to provide distillers with around 9 million tonnes of broken rice every year.https://unbiasedpollkhol.com/
3. The Strange Economics: Why Is Subsidized Rice Being Used for Ethanol?
So why is the government selling rice at such a low price?
Because purchasing rice from the open market at MSP level prices and then converting it into ethanol would make ethanol significantly more expensive.
According to Petroleum Ministry figures cited in the report, ethanol produced from surplus FCI rice costs around ₹60 per litre. Ethanol produced from maize costs approximately ₹72 per litre, while ethanol produced from sugarcane costs around ₹66 per litre.
By comparison, producing petrol from crude oil, including processing costs, is estimated at approximately ₹55 per litre. This means that even with subsidized rice, ethanol can still cost more than petrol produced from imported crude oil.
The government has defended the ethanol programme in Parliament as well.
Therefore, according to the government, ethanol should not simply be viewed as an expensive fuel component. Rather, it is a mechanism that helps keep petrol prices lower while reducing India’s dependence on imported crude oil.
But the question remains: who is actually bearing the cost?