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Grain ethanol producers are requesting an increase in the current ethanol price from Rs. 58.50/liter to Rs.70.71/liter. This request follows the government's decision to raise the price at which the Food Corporation of India (FCI) sells rice to distilleries, from Rs.20/kg to Rs.28/kg. The Grain Ethanol Manufacturers Association (GEMA) has officially approached the petroleum ministry to adjust the ethanol pricing in response to the new rice cost.

C K Jain, president of GEMA, commented on the situation, explaining that the request was made following the fixed rice price announcement by the Food Ministry on January 7. According to this policy, ethanol manufacturers are to purchase rice at Rs. 2800 per quintal, with no additional charges for transportation. This is a shift from the previous policy set in August 2024, which allowed distilleries to buy rice at the average auction price from FCI's weekly e-auctions. At that time, the government had allocated 23 lakh tonnes of rice for ethanol production through October 2024.

Since the beginning of the ethanol year in November 2024-25, there had been no updates on FCI rice prices until this recent adjustment. The government has not yet announced any changes to ethanol pricing for other raw materials.

Earlier reports suggested that the government might increase ethanol prices by Rs.1.50 to Rs.1.70 per liter only for ethanol derived from sugarcane juice/syrup and B-Heavy Molasses. The prices for ethanol produced from maize, damaged food grains (rice), and C-Heavy molasses are expected to remain the same.

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An official from a dual-feed distillery in Uttar Pradesh mentioned that no rice was taken from the 23 lakh tonnes allocated last year for ethanol production. The uptake of rice at the new rate of Rs.28/kg will depend on the revised ethanol price. If the price remains at Rs.58.50/liter, the official suggested that the FCI would need to decrease its selling price to Rs.22.50/kg to keep ethanol production economically feasible and help achieve the 18% blending target for the current supply year.