In a bid to reduce dependence on imported crude oil and adopt eco-friendly strategies, the Government of India has implemented an ethanol blending program. As of February 28, 2025, India achieved a 17.98% ethanol blending rate under the current ethanol supply year (2024–25), moving steadily towards the 20% target. This is a commendable achievement.

To meet the larger goal of 25% blending, ethanol production must be significantly ramped up.

Feedstock for Ethanol Production

To boost ethanol availability, the government has launched proactive policies and incentive schemes. Numerous new ethanol production projects are underway. The sugar industry remains the backbone of the ethanol economy, with molasses as the primary feedstock.

However, with sugarcane molasses nearing its maximum ethanol potential, the government has permitted other sources such as sugarcane juice, maize, rice, biomass, and grains as additional feedstock options.

The Cost-Benefit Question

When food crops like maize are diverted to ethanol production, a key question arises: Is this the most beneficial use of such resources? Decisions of this scale require thorough cost-benefit analysis. The current approach appears to prioritize ethanol production over broader economic and social considerations.

Critics may reasonably argue that diverting maize for ethanol, without due consideration for its other applications, is akin to "cutting off the nose to spite the face."

Maize: Food, Fodder, and Industrial Potential

Maize is India's third most important cereal after rice and wheat. It is widely used as both a food and fodder crop and is a key raw material for several industrial products.

Several high-value products such as citric acid and L-Lysine, which can be derived from maize, are not manufactured in India and are currently imported. India imports over 100,000 tonnes of citric acid and 85,000 tonnes of L-Lysine annually, with demand growing 6–7% each year.

India produces 42 million tonnes of maize annually, with a target of 50 million tonnes by 2030. Utilizing maize to produce these high-value products could be far more economically beneficial than converting it into ethanol. Moreover, such production could reduce foreign exchange outflows and enhance self-reliance.

To promote ethanol from maize, the government offers incentives. In January 2024, oil marketing companies raised the procurement price of maize-based ethanol to ₹71.86 per litre, including a ₹5.79 per litre incentive.

Rice as Feedstock: Unwise and Risky

Unlike maize, rice is a staple food grain vital for nutritional security in India and many other countries, including Japan, China, Vietnam, and Sri Lanka. Any shortage of rice can spark social unrest.

Recently, Japan had to release 300,000 tonnes of rice from emergency reserves to quell public anger over shortages. Reports even noted incidents of rice theft and the resignation of a Japanese minister over the crisis.

Against this backdrop, using rice for ethanol raises ethical and practical concerns. Many consider this a misuse of a crucial food grain. Diverting rice for non-food purposes risks food security and contradicts public sentiment.

Nevertheless, the Government of India has increased the rice allocation for ethanol to 5.2 million tonnes for the 2024–25 ethanol year. Assuming a conversion rate of 470 litres per tonne, this could yield around 2.45 billion litres of ethanol.

Where Is the Justification?

The government has not provided a convincing rationale for using rice for ethanol, apart from citing the need to boost ethanol supply. The argument seems to rest on the assumption that rice stocks in Food Corporation of India (FCI) godowns are sufficient.

As of May 15, 2025, India held 38.19 million tonnes of rice, well above the buffer norm of 13.54 million tonnes. Additionally, unmilled paddy could yield another 21.36 million tonnes of rice. But reports of storage issues and damaged rice due to exposure suggest mismanagement.

If surplus rice exists, the better option would be to export it—enhancing farmer incomes and earning foreign exchange—rather than converting it to ethanol. Especially when India's rice export policy has been inconsistent: restrictions were imposed in 2023–24 but lifted in October 2024, with the last remaining ban (on 100% broken rice) removed in March 2025.

Viable Alternatives: Algae and Biofuels

India should also explore other avenues to reduce crude oil imports. Ethanol production can be increased through alternate, non-food feedstock like algae. Algae can grow on wastelands or coastal areas, requires no freshwater, and thrives on sunlight and carbon dioxide. Algae species contain around 20% oil, making them ideal for biofuel. Ethanol can also be produced from algae biomass through fermentation.

Using algae does not conflict with food crops and offers a long-term, sustainable path to biofuel production. It's puzzling that this obvious alternative has not been pursued with sufficient seriousness.

A Short-Term Strategy?

India, with its population of 1.4 billion and rising, is the world’s most populous country. Despite economic progress, many still live below the poverty line, and rice is distributed freely to low-income households.

In this context, allocating rice for ethanol appears short-sighted and potentially counterproductive. Should production dip due to climatic or other factors, food security could be threatened. India must learn from Japan’s current rice crisis and avoid similar pitfalls.

The right course for India is to export surplus rice, strengthen its position in the global market, and stabilize farmer incomes. Although international rice prices fluctuate, global demand remains strong, with 2024–25 production estimated to exceed 535 million tonnes, according to agencies like FAO and the USDA. Using surplus rice for ethanol, simply because it is available, reflects reactive and unsustainable policy.

(The author is the founder-director of Nandini Consultancy Centre, offering business consultancy to the chemical and allied industries. He is also a current affairs commentator and a Trustee of the NGO Nandini Voice for the Deprived, Chennai. Views are personal. He can be reached at nsvenkatchennai@gmail.com.)