New Delhi: India is facing increasing pressure to balance food security with its ambition to expand ethanol production as rice prices continue to rise and concerns over agricultural supplies grow. The government has introduced fresh measures to improve domestic rice availability, while industry reports indicate that shortages of agricultural commodities could affect the country's ethanol blending programme.
The developments have raised questions about the competing demands for rice, which is a major staple food for millions of Indian households, and its growing use as an industrial raw material for producing ethanol.
On November 6, the Ministry of Consumer Affairs, Food and Public Distribution announced additional measures to monitor rice stocks and improve market supplies. The government directed traders, wholesalers, retailers, large retail chains, processors and rice millers to declare their rice and paddy stocks every week through the Food Stock Portal.
The required declarations cover basmati rice, premium non basmati rice, ordinary non basmati rice, parboiled rice, broken rice and paddy. Businesses must update their stock information every Friday. The government warned that violations could attract action under the Essential Commodities Act, 1955.
The Centre also authorised Kerala, Karnataka, Tamil Nadu, Andhra Pradesh and Telangana to impose stock limits on rice and paddy wherever necessary. The authorisation will remain valid until January 31, 2027.
As part of its efforts to make rice more affordable, the government has increased the allocation of Bharat Rice through the National Agricultural Cooperative Marketing Federation of India, the National Cooperative Consumers' Federation and Kendriya Bhandar.
The government has also doubled its Open Market Sale Scheme (Domestic) rice sale target for the 2026 to 2027 financial year from 25 lakh metric tonnes to 50 lakh metric tonnes. By October 31, it had already sold 25 lakh metric tonnes through electronic auctions.
The measures come amid rising food prices and concerns about India's agricultural output. Rice prices have increased by around 20 per cent, while retail food inflation accelerated to 7.74 per cent in September, compared with 5.97 per cent in August.
India's agricultural sector is also facing pressure from below normal monsoon rainfall and concerns about the effects of El Niño. Industry estimates suggest that rice production could fall from a record 154 million tonnes in the 2025 to 2026 season to around 146 million to 147 million tonnes in 2026 to 2027.
However, substantial government stocks are expected to provide some protection against possible supply shortages.
Another important development concerns the government's revised quality standards for rice distributed through welfare programmes.
On July 2, the Cabinet Committee on Economic Affairs approved changes to the permissible proportion of broken grains in rice supplied under the Pradhan Mantri Garib Kalyan Anna Yojana and other welfare schemes.
Under the revised specifications, the permissible broken grain content in raw rice will decrease from 25 per cent to 10 per cent. For parboiled rice, the limit will fall from 16 per cent to 5 per cent.
The government estimates that the changes could generate annual savings of around Rs 2,161 crore by improving rice quality and reducing storage, transportation and packaging costs.
The revised standards are expected to be implemented across procuring states in phases by the Kharif Marketing Season of 2027 to 2028. The government has clarified that the existing food entitlements of beneficiaries will not be reduced.
The changes will also allow broken grains separated during milling to be sold for productive industrial uses, including ethanol production.
India has been using surplus rice held by the Food Corporation of India for ethanol manufacturing as part of its efforts to reduce dependence on imported crude oil and increase the use of locally produced fuel.
Information presented in Parliament showed that the Food Corporation of India dispatched 6.35 million tonnes of rice to ethanol manufacturing plants between June 2025 and June 2026, at a total value of Rs 14,596.78 crore.
The government maintains that food security requirements take priority over industrial demand. Rice procured through the Minimum Support Price system must first meet the requirements of the Public Distribution System, welfare programmes and mandatory buffer stocks. Only surplus stocks approved by the Department of Food and Public Distribution can be allocated for ethanol production.
However, India's ethanol ambitions are facing additional challenges as agricultural commodity prices rise.
Recent industry assessments indicate that India's ethanol blending rate could fall from its 20 per cent target to around 15 to 17 per cent during the current supply year. The expected decline is linked to shortages and higher prices of agricultural feedstocks, including corn and sugar.
Ethanol manufacturers are also facing competition for broken rice from poultry feed producers and other industries. Industry representatives have raised concerns about the availability of supplies as domestic demand increases.
Meanwhile, rice exporters have expressed concern about the possibility of fresh restrictions on broken rice exports if domestic prices continue to rise. However, government officials said on November 7 that there was no proposal at that time to impose fresh restrictions on broken rice exports.
The developments highlight the growing challenge facing India as it seeks to maintain affordable food supplies while expanding its renewable fuel programme.
Although the government says its food security safeguards will protect ration beneficiaries, rising prices, uncertain agricultural production and increasing industrial demand are likely to remain important concerns in the coming months.