Diverting surplus rice to ethanol production creates a food–fuel trade-off. Discuss with reference to recent policy.

On 1 July 2025, the central pool held 377.83 lakh tonnes of rice against a buffer norm of 135.40 lakh tonnes [2]. That is nearly 2.8 times the requirement. Selling this surplus to distilleries helps the Ethanol Blending Programme (EBP). However, cheap public grain used for fuel competes with its main job of protecting food security and keeping prices stable.

Recent policy

• The revised OMSS (D) 2024-25 policy fixed the price of rice for ethanol distilleries at ₹2,250/qtl, pan-India [1]. Only distilleries registered with oil marketing companies (OMCs) can buy it [7].
• By 18.11.2025, 33.06 LMT of rice had been sold to distilleries [3].
• For 2026-27, the OMSS (D) rice target was doubled from 25 to 50 LMT. It came with weekly stock disclosure, stock limits until 31.01.2027 and extra Bharat Rice for the Southern States [5].

Benefits of the diversion (fuel side)

• Storage costs: the grain has already been bought. Every extra year in godowns adds carrying cost and quality loss to stocks that are already 2.8× the norm [2].
• Bulk offtake: distilleries take large volumes quickly [3].
• Energy security: blending cuts crude imports and emissions.

Costs to the food side (the trade-off)

• Fiscal: FCI's economic cost of rice was about ₹39.8/kg in 2024-25 [6], against ₹22.5/kg charged to distilleries [1]. The gap is added to the food subsidy bill.
• Leakage: the low price invites resale as food. Parliament was told of two cases of diversion, and FCI stopped supplying those distilleries [4].
• Competing demand: in 2026, the same stock is needed for OMSS and Bharat Rice to calm prices, even as traders face stock limits [5]. Cheap rice sold for fuel can no longer be used for this.
• Ethical: turning a staple into fuel is hard to justify while nutrition gaps persist.

Way forward

• Food first: allot ethanol quantities only after OMSS and Bharat Rice needs are met, and only from stock above buffer norms.
• End-use audit: match each distillery's ethanol output against the rice it bought [4].
• Diversify feedstock: move towards second-generation ethanol made from crop residue.

Selling surplus rice for ethanol is sound only when the surplus is genuine and its end use is tracked. A food-first rule tied to stock levels, backed by audits, would let India advance both SDG 2 (Zero Hunger) and SDG 7 (Clean Energy) without trading one for the other.