India's Ethanol Programme Exposed: Food Security vs Fuel

India's ethanol-blended petrol (EBP) programme has been touted as a means to reduce petroleum imports and save foreign reserves, but experts say the current economics don't support the plan. The government is supplying 'surplus' rice from Food Corporation of India (FCI) godowns to distillers producing ethanol at a subsidised rate.

According to the Ministry of Petroleum and Natural Gas, the EBP programme doesn't compromise India's food security programme. However, experts point out that diverting rice bought under the food security programme using taxpayers' money to produce ethanol is a significant sacrifice, especially in a country where 80 crore people depend on free rations.

India's Chief Economic Advisor (CEA) V Anantha Nageswaran has cautioned against rushing towards higher ethanol blends, arguing that some moves around agriculture and distillery capacity might be difficult to undo. The government has mandated the sale of E20 petrol, which is a mix of 20% ethanol in a litre of petrol, but experts say this may not be feasible for older vehicles.

India's ethanol production capacity expanded from about 421 crore litres in 2014 to nearly 2,000 crore litres by 2026, leaving the country with a surplus capacity of 700 crore litres. The government has mandated distillers to source at least 40% of their feedstock from surplus rice stocks held by the FCI.