The government also said no subsidy was extended to ethanol producers, noting that rice was sold at the fixed prices prescribed under the OMSS (Domestic) policy.

Unis Ahmad Dar – New Delhi

The Food Corporation of India (FCI) sold rice to ethanol distilleries at prices nearly 40 per cent below its average acquisition cost between June 2025 and June 2026, the government told Parliament on Tuesday. 

In a written response to an unstarred question in Rajya Sabha, Minister of State for Consumer Affairs, Food and Public Distribution Nimuben Jayantibhai Bambhaniya revealed the FCI sold rice under the Open Market Sale Scheme (Domestic) at ₹2,250 per quintal between June and October 2025 and ₹2,320 per quintal from November 2025, while its all-India average acquisition cost stood at ₹3,719.72 per quintal in FY25 and ₹3,889.46 per quintal in FY26 (revised estimates).

The figures indicate that rice supplied to ethanol producers was priced around 40 per cent below what it cost FCI to procure and handle the grain. 

The minister, however, said no subsidy was extended to ethanol producers, noting that rice was sold at the fixed prices prescribed under the OMSS (Domestic) policy. 

The parliamentary reply also shows FCI dispatched 6.35 million tonnes of rice to ethanol plants during the 13-month period from June 2025 to June 2026, with the grain valued at ₹14,596.78 crore. 

Haryana received the largest allocation of rice during the period at 844,141 tonnes. It was followed by Uttar Pradesh, which received 838,645 tonnes; Punjab and Himachal Pradesh combined at 658,952 tonnes; West Bengal at 584,672 tonnes; and Madhya Pradesh at 432,485 tonnes.

The minister also informed Parliament that two cases of diversion involving FCI rice allocated for ethanol production had been detected. Following the irregularities, state food departments initiated action and the FCI stopped further allocations to the two distilleries involved. 

India achieved 20 per cent ethanol blending in petrol in July 2025, five years ahead of its target, under the government’s push to cut crude oil imports, reduce emissions and boost farmer incomes. The programme, however, has faced criticism from some consumers over concerns that higher ethanol blends lower mileage and could affect vehicle engines. 

Earlier, the government told Parliament that no decision had been taken to raise ethanol blending beyond 20 per cent, saying any future increase would follow scientific studies and stakeholder consultations.

Published Date: July 30, 2026