India's Ethanol Ambitions: Abundance Overcomes Scarcity Fears

India is on track to achieve a 20% ethanol blending ratio in its petrol by the Ethanol Supply Year 2025, as new data suggests that fears of feedstock shortage are unfounded. A recent report by Incred Research indicates that less than half of the rice buffer stock held by the Food Corporation of India (FCI) can meet the entire blending requirement.

The report highlights that 23 million metric tonnes of rice can be converted to 11 billion liters of ethanol, which is sufficient to fulfil India's blending aims. Currently, FCI's rice buffer norm stands at 13.5 million metric tonnes, but the existing stock has surged to 54 million metric tonnes, quadrupling the necessary buffer. This means that even a partial diversion of surplus rice can comfortably meet the blending goal, without considering additional feedstocks like maize, which have also seen significant production increases.

Data reveals that India's grain output is booming. In fiscal year 2025, rice production hit a record 150 million metric tonnes, surpassing the decade average of 120 million metric tonnes. Similarly, maize output reached an all-time high of 42 million metric tonnes, compared to a long-term average of 30 million metric tonnes. These figures are expected to rise further in FY26, signaling a structural advance in agricultural productivity.

The issue of surplus stocks is more than a numbers game. With rice stocks at four times the required buffer and ongoing procurement, there is potential for using excess supplies as ethanol feedstock. However, this abundance poses a challenge for FCI in terms of storage constraints and the risk of spoilage from extended storage and inadequate warehousing.

While sugar-based ethanol producers face policy challenges and stagnant prices, grain-based distilleries stand to benefit from record harvests and surplus inventories. The report concludes that India's ethanol initiative is no longer hindered by feedstock concerns. Less than half of FCI's rice buffer is ample to meet the blending goal, complemented by record maize yields that add extra insurance, effectively dispelling the myth of scarcity.