India's ethanol push: Balancing energy needs with food security concerns

By N.S. Venkataraman*

Reducing import dependence on crude oil and promoting an eco-friendly strategy, the Government of India is implementing plans to blend ethanol with petrol—an appropriate strategy that has achieved a 17.98% ethanol blending rate as of February 28, 2025, under the ongoing ethanol supply year (2024-25), moving towards the 20% blending target. 

Achieving the 25% target necessitates a substantial increase in domestic ethanol production, for which the government has initiated proactive policies and incentives, with numerous new projects underway. The sugar industry, relying on sugarcane molasses, remains central to the ethanol economy. To further boost production beyond molasses availability, the government has permitted sugarcane juice, maize, biomass, grain, and rice as feedstocks.

However, allowing food crops like maize for ethanol raises questions about the most profitable and beneficial use of maize. The government should not solely focus on ethanol availability without carefully considering alternative applications of maize and their benefits. It appears a tunnel vision for ethanol feedstock might be overshadowing other potentially more beneficial uses of maize, leading critics to suggest this approach is counterproductive.

Maize, India's third most important cereal, serves as food, fodder, and raw material for industrial products. Several maize-based derivative products, such as citric acid and L-Lysine, are currently imported entirely, with annual imports exceeding one lakh and 85,000 tonnes respectively, and a growing domestic demand of 6-7% annually. Other imported maize derivatives like mannitol also exist. 

With India's maize production at 42 million tonnes annually, aiming for 50 million by 2030, converting maize into value-added products like citric acid and L-Lysine could be more remunerative than ethanol production, reducing significant foreign exchange outflow from imports. Incentives to distilleries have increased the procurement price of maize-based ethanol, reflecting efforts to meet blending targets.

The use of rice, an essential food grain with deep cultural significance, as ethanol feedstock is questionable. A shortage of rice can lead to social unrest, as seen recently in Japan. Using rice for ethanol production is viewed by many as a misuse, conflicting with its importance for human welfare. Despite these concerns, the Government of India has increased the rice allocation for ethanol to 52 lakh tonnes for the 2024-25 supply year. This allocation could yield approximately 245 crore litres of ethanol.

The government's justification for using rice for ethanol production, beyond the need to increase ethanol output, remains unclear. While India's rice stocks in FCI godowns are reportedly above the buffer norm, the right strategy might be to export surplus rice, strengthening the agricultural sector and improving farmers’ income. India's rice export policy has seen fluctuations, with recent lifting of curbs. Diverting surplus rice to ethanol production, simply due to current surplus stocks, appears to be a short-term reaction.

Beyond ethanol blending, reducing crude oil imports can be achieved through renewable energy and electric vehicles. Additionally, focusing on alternate, non-food crop feedstocks for ethanol, such as algae, deserves attention. Algae can be cultivated in coastal and waste lands, requiring only sunlight and carbon dioxide, and can yield both biofuel and ethanol. This option avoids competition with food crops, making large-scale algae cultivation an attractive opportunity that surprisingly has not been pursued with due seriousness.

With India's growing population and a significant portion still below the poverty line relying on free rice distribution, allocating rice for ethanol production can be seen as a counterproductive, short-term plan. Lessons should be learned from Japan's recent rice crisis and the resulting social unrest. The right course for India is to export surplus rice, capitalizing on the international rice trade. 

While global rice production forecasts suggest potentially higher carry-over stocks, the international market remains vibrant, and India should aim for a stable position as a rice exporter, rather than frequently changing its export policy. Using surplus rice for ethanol production simply because of current stock levels is a short-sighted approach.

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*Trustee, Nandini Voice For The Deprived, Chennai