Grain-based ethanol gains momentum: What it means for India’s blending programme
Grain-based feedstocks, particularly maize and surplus rice, are accounting for a growing share of ethanol supplied under India's fuel blending programme
The shift supports farm incomes and rural industry while reducing reliance on sugarcane as the dominant ethanol feedstock
Government-fixed pricing continues to make surplus foodgrain available to distilleries at notified rates, with safeguards to protect food-security stocks
The trend is being read as consistent with India's stated targets for ethanol blending in petrol and its wider clean-energy goals
National Policy on Biofuels, 2018 (amended 2022) and the Ethanol Blending Programme
The Ministry of Petroleum and Natural Gas notified the National Policy on Biofuels in 2018 to promote biofuel production and blending, and amended it in June 2022 to accelerate the 20 percent ethanol-blending target in petrol from 2030 to Ethanol Supply Year (ESY) 2025-26. The amendment also expanded the range of permissible feedstocks and allowed biofuel production and export under specified conditions.
Key Details
- Ethanol blending in petrol rose from about 1.14 percent in 2014-15 to 20 percent in ESY 2025-26 (the supply year runs November to October)
- Intermediate milestones: blending reached roughly 12.06 percent in ESY 2022-23, 14.60 percent in ESY 2023-24, and 17.98 percent in ESY 2024-25
- India reached its earlier 10 percent blending target ahead of the original schedule
- The 2022 amendment also permitted production of biofuels by units in Special Economic Zones and Export Oriented Units under the Make in India framework
The rising share of grain-based ethanol is occurring within this accelerated blending trajectory, as the programme's expanded feedstock basket under the 2022 amendment allows distilleries to draw more heavily on grain in addition to sugarcane-derived molasses and juice.
Feedstock Shift — Sugarcane versus Grain-Based (1G) Ethanol and Food Security Safeguards
Ethanol for blending in India is produced mainly from sugarcane-derived sources (molasses, sugarcane juice, and B-heavy molasses) and from grain-based sources (maize, damaged foodgrain, and surplus rice released by the Food Corporation of India). Both routes fall under first-generation (1G) biofuel production, using food-grade feedstock, in contrast to second-generation (2G) ethanol made from agricultural residue such as rice straw or bagasse.
Key Details
- Maize now accounts for a large share, reportedly over 40 percent, of ethanol supplied under the programme, and requires substantially less irrigation than paddy cultivation
- The government has stated that ethanol production draws only on surplus foodgrain remaining after meeting requirements under the Public Distribution System, the National Food Security Act, 2013, and buffer-stock norms
- The FCI supplies rice for ethanol production at a notified price, distinct from the open-market or PDS price, with periodic revisions
- Reliance on grain-based feedstock has drawn scrutiny over its implications for foodgrain stocks and water use, weighed against sugarcane ethanol's own high water footprint
The growth in grain-based ethanol reflects a deliberate diversification of feedstock beyond sugarcane, justified by the government on food-security-safe surplus-grain utilisation and lower water intensity of crops such as maize.
Pricing Mechanism for Ethanol Feedstock and Comparison with the MSP System
Ethanol procurement prices for different feedstocks are administratively fixed by the government (through the Ministry of Petroleum and Natural Gas in consultation with the Cabinet Committee on Economic Affairs), distinct from the Minimum Support Price (MSP) mechanism for foodgrain, which is recommended by the Commission for Agricultural Costs and Prices (CACP) and approved by the CCEA.
Key Details
- Differential ethanol prices exist by feedstock: for instance, rice-based ethanol carries a substantially higher production cost than maize-based ethanol
- FCI rice released specifically for ethanol production has carried notified prices around ₹2,300–2,400 per quintal in recent supply cycles, revised periodically
- The MSP mechanism, by contrast, governs procurement of foodgrain for the PDS and buffer stock and is a separate administrative process from ethanol feedstock pricing, though both ultimately affect farm incomes
- Maize's inclusion in the blending programme has also been linked to demand-side support for MSP realisation in maize-growing states
The economics of the blending programme depend on this administered-pricing structure, where feedstock-specific rates determine which grain becomes commercially attractive for ethanol production in a given year.
- 20 percent ethanol-blending target (E20) achieved in ESY 2025-26, advanced from the original 2030 deadline by the 2022 policy amendment
- Blending trajectory: about 1.14% (2014-15) to 12.06% (2022-23), 14.60% (2023-24), 17.98% (2024-25), 20% (2025-26)
- Maize's share of ethanol supply under the programme has crossed roughly 40 percent
- Nodal ministry: Ministry of Petroleum and Natural Gas; policy basis: National Policy on Biofuels, 2018, amended 2022
- Food-security safeguard: ethanol production restricted to surplus grain after PDS, NFSA 2013, and buffer-stock requirements are met
- FCI-notified rice price for ethanol production has ranged around ₹2,320-₹2,390 per quintal across recent supply cycles