Is ethanol blending fuelling food inflation? Govt says only surplus stocks are used

The government's target of achieving 20% ethanol blending in petrol has not affected food crop availability or India's food security, Parliament was informed on Monday.

In a written reply to the Rajya Sabha, Minister of State for Petroleum and Natural Gas Suresh Gopi said only surplus foodgrains, after meeting requirements for welfare schemes and prescribed buffer stocks, are allowed to be used for ethanol production.

"The target of 20% ethanol blending has not affected food crop availability or India's food security," the minister said.

He said the ethanol blending programme follows a "waste-to-wealth" approach by using surplus agricultural produce, including damaged foodgrains, broken rice and grains unfit for human consumption, along with other approved feedstocks that might otherwise remain underutilised.

According to the government, the programme provides an additional source of income for farmers, strengthens energy security by reducing dependence on imported crude oil and safeguards national food security.

It is also promoting second-generation (2G) ethanol produced from agricultural residues under the Pradhan Mantri JI-VAN Yojana to reduce dependence on food-based feedstocks.

Replying to another question, Gopi shared data on the quantity of surplus FCI rice and maize diverted for ethanol production over the last three Ethanol Supply Years (ESY).

Surplus FCI rice diverted for ethanol production stood at 31.11 lakh metric tonnes (LMT) in ESY 2024-25 and 39.28 LMT in the current ESY 2025-26 (up to June 30, 2026).

Maize diversion was 75.38 LMT in ESY 2023-24, 131.18 LMT in ESY 2024-25 and 67.87 LMT in the current ESY up to June 30.

On the impact on retail food inflation, the minister said only surplus sugar is diverted for ethanol production and retail sugar prices have risen by around 2.5% compared with the previous sugar season 2024-25.

He added that diversion of surplus FCI rice has had no impact on retail food inflation as it takes place only after meeting food security requirements and maintaining buffer stocks.