India Plans 90 Lakh Tonne Rice to Ethanol to Cut Oil Imports

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AuthorVihaan Mehta|Published at:
India Plans 90 Lakh Tonne Rice to Ethanol to Cut Oil Imports
Overview

The Centre is proposing to divert approximately 90 lakh tonnes of broken rice from the Public Distribution System (PDS) annually to the ethanol sector. This strategic move aims to bolster biofuel production and reduce reliance on imported crude oil amidst a significant surge in global prices. The proposal involves reducing the broken rice allocation in PDS from the current 25 per cent to 10 per cent, ensuring a steadier feedstock supply for distilleries and supporting India's energy security objectives.

Policy to Free Up Broken Rice for Ethanol

The Centre's proposal to reduce broken rice allocation in the public distribution system from 25% to 10% would free up roughly 90 lakh tonnes of broken rice annually. This surplus will be made available through auctions to ethanol manufacturers and other industries, ensuring a more stable year-round feedstock for the sector. A trial run of this auction process has already been successfully completed in five states, paving the way for nationwide implementation.

Boosting Ethanol Blending Targets

This initiative directly supports India's ambitious ethanol blending program, which has seen petrol blending reach 20%. This has already resulted in substantial foreign exchange savings, estimated at over ₹1.63 lakh crore, and a reduction in crude oil imports by 277 lakh metric tonnes since 2014. With global crude oil prices having surged by approximately 40% in recent weeks, the move to increase ethanol availability is seen as critical for mitigating import costs and enhancing energy security.

Expanding Biofuel Use

Beyond simply increasing supply, the government is actively exploring further ways to integrate biofuels. Discussions are underway to potentially raise the petrol blending limit above 20%, explore mixing ethanol with diesel, and promote flex-fuel vehicles. These measures aim to deepen the country's reliance on renewable energy sources and further decouple its economy from volatile international oil markets.

Securing Feedstock Supply

The policy aims to rectify past supply chain disruptions. In 2023, poor sugar harvests and concerns over rice production had previously led the government to restrict feedstock supply to distilleries, impacting the industry. Ensuring a consistent supply of broken rice addresses this vulnerability, especially in the face of climate change realities. Maize is also being promoted as a secondary feedstock, with high-yield varieties under development by the agriculture ministry. India's ethanol production capacity has seen remarkable growth, expanding from 420 crore litres in 2013-14 to nearly 2,000 crore litres currently. Food Secretary Sanjeev Chopra urged distilleries to expedite lifting current FCI rice allocations before the discount price expires on June 30.

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