The government has also allocated an additional 55 lakh tonne of fully broken rice for sale through e-auction, which ethanol producers can procure, potentially making biofuel production more profitable.
| Photo Credit:
SRINATH M
As the Centre scales up grain-based ethanol production to support higher blending targets and reduce dependence on imported fossil fuels, the food ministry has reserved 72 lakh tonne (lt) of rice from official stocks for distilleries in the next ethanol season, up from 52 lt allocated in the 2025-26 supply year.
It has also allocated an additional 55 lakh tonne (lt) of 100 per cent broken rice for sale through e-auction, which ethanol producers can procure, potentially making biofuel production more profitable.
Biofuel Push
In a communication to the Food Corporation of India (FCI) on July 16, the ministry stated that the competent authority has approved the sale of 72 lt of rice at ₹2,390/quintal to ethanol distilleries for production during the Ethanol Supply Year (ESY) 2026-27 (November 2026 to October 2027), sources said.
Further, the ministry has earmarked 55 lt under the sale of resultant broken rice produced under the Rice Milling Transformation (RMT) scheme through open market e-auctions. On July 2, it had fixed reserve prices for rice and wheat sold under various categories, including ₹2,000/quintal as the base reserve price for RMT rice. However, the government has said that the Dynamic Reserve Price (DRP) will be decided every quarter by a committee.
Cost Advantage
The move is significant because oil marketing companies (OMCs) are mandated to procure ethanol made from FCI rice at ₹58.5 per litre. The procurement price rises to ₹64 per litre for ethanol produced from broken rice. Since there is no restriction or mechanism governing the use of FCI’s 100 per cent broken rice sold through e-auctions, industry sources said it could also be diverted for ethanol production, improving distillery economics.
Also, as the government is considering increasing the ethanol blending share with petrol from the current 20 per cent, with testing and trials are underway, rice from the government’s stocks may ensure steady supply of ethanol in case of sugarcane and maize production due to a deficient monsoon. Against an annual ethanol production of nearly 2,000 crore litres, OMCs need 1,050-1,100 crore litres per year to meet the 20 per cent blending target.
For the sale of rice to State governments, their agencies, as well as for community kitchens without e-auctions, the government has allocated 16 lt at ₹2,320/quintal during July-October and another 32 lt at ₹2,390/quintal during November 2026-June 2027.
The government has, however, deferred allocations for national co-operatives such as Nafed, NCCF and Kendriya Bhandar for retail sale under the ‘Bharat’ brand, stating the quantity “will be intimated in due course”. These agencies had earlier sold ‘Bharat’ rice at government-notified prices.
The Centre has also allocated 25 lt of rice for sale to private parties and co-operatives through e-auction at reserve prices of ₹2,660-2,890/quintal during July-October and ₹2,740-2,970/quintal during November 2026-June 2027. Within this allocation, small private traders, entrepreneurs and individuals will be able to procure rice at ₹2,890/quintal during July-October and ₹2,970/quintal during November 2026-June 2027.
The food ministry has also decided to sell 20 lt of rice containing 10 per cent broken grain in the open market through e-auction at reserve prices of ₹3,090/quintal during July-October and ₹3,180/quintal during November 2026-June 2027.
Published on July 19, 2026
