The Food Corporation of India sold rice to ethanol distilleries at prices roughly 40 percent below its average acquisition cost between June 2025 and June 2026, the Union government told the Rajya Sabha on Tuesday.
Over this 12-month period, the public sector organisation dispatched 6.3 million tonnes of rice worth ₹14,596 crore to producers of ethyl alcohol. While the grain was sold at prices ranging between ₹2,250 and ₹2,320 per quintal, the government's average acquisition cost stood at ₹3,720 per quintal in the 2024–25 financial year and rose to ₹3,889 per quintal in 2025–26. Looking ahead, the Ministry of Food and Public Distribution stated that rice will be sold to distilleries for ₹2,390 per quintal between November 2026 and June 2027, while maintaining that no direct subsidy is granted to ethanol manufacturers for procuring rice.
Allocation data shows Haryana received the largest share of grain at 844,141 tonnes, followed by Uttar Pradesh at 838,645 tonnes, Punjab and Himachal Pradesh combined at 658,952 tonnes, West Bengal at 584,672 tonnes, and Madhya Pradesh at 432,485 tonnes. The Ministry also revealed that authorities detected two cases where rice intended for ethanol production was illegally diverted. Following the discovery of these irregularities, state food departments initiated enforcement action, and the Food Corporation of India permanently halted further rice allocations to the two distilleries involved.
The steady supply of grain supports India’s Ethanol Blended Petrol programme, which mandates a 20 percent ethanol mix in petrol to cut fossil fuel imports, lower emissions, and support farmers. India reached its 20 percent blending target in July 2025, five years ahead of its original timeline. However, the rapid transition has sparked growing frustration among motorists over reduced vehicle mileage and potential engine damage. A survey by LocalCircles published on July 5 highlighted this discontent, showing that 53 percent of surveyed petrol vehicle owners viewed the government's execution of the rollout as either disastrous or ineffective.