India’s ethanol vision needs a feedstock reality check

Opinion India's ethanol vision needs a feedstock reality check Higher demand could potentially growth costs which will trickle to rates of dairy, meat and related products ethanol production.

Key points

• 3 min readSep 21, 2026 06: 15 AM IST First published on: Sep 21, 2026 at 06: 15 AM IST.
• Maize again comes at the lowest cost which is around Rs 20, 000-21, 000 per tonne.
• The writer is chief economist, Bank of Baroda, and author of Corporate Quirks: The Darker Side of the Sun.
• Ethanol can be produced from maize, rice and sugarcane-derived products.
• The cost of sugar has gone up.

Ethanol can be produced from maize, rice and sugarcane-derived products. Around 45 per cent comes from maize and 20-25 per cent from rice, with the balance being sugar based. (File Photo). Written by: Madan Sabnavis.

For context, the cost of sugar has gone up. This is part of a normal cycle based on how sugar output moves. But, it comes at a time when there has been a push for the production of ethanol to reduce the import of crude oil. Some pertinent problems have been raised considering that sugarcane is additionally an significant feedstock for producing ethanol. At a broader level, will this lead to pressure on crop supplies?

Maize again comes at the lowest cost which is around Rs 20, 000-21, 000 per tonne. In case of rice, it is around Rs 38, 000-39, 000 per tonne while for sugar it works out to approximately Rs 37, 000 per tonne. Therefore, firms would prefer to apply maize. But, all three guzzle a lot of water. In the case of maize, it takes 500-900 litres to produce one kg. It goes up to 1, 500-2, 500 litres for sugarcane and 2, 000-3, 500 litres for rice. Hence, ideally more maize should be diverted for ethanol production.

For maize, there are three sources of demand. First, households, who account for a small part of the demand. Second, maize is additionally employed for supporting cattle and poultry and accounts for 60 per cent of the total feed. Third, for industrial employ, where starch is the product. Ethanol will now be the fourth dimension. As a consequence, demand has to be met by using existing domestic seeds, considering that production using GM variety seeds is not permitted for maize, output expansion and. This can be a difficulty as demand for ethanol is now going to rise with E20 being produced mandatory. Higher demand could potentially growth costs which will trickle to rates of dairy, meat and related products. Meanwhile, a tempting solution would be to allow the employ of GM seeds to enhance output for only ethanol production.

Presently, the excess stocks of rice held by the FCI. It were procured earlier, have been sold in the market. As the quality of rice was low, it created sense to sell these stocks in the open market. But this cannot be the strategy going forward while considering a feedstock for producing ethanol. The higher water usage for rice and sugarcane may create maize a preferred feedstock. But the incremental output will only add to the pressure on water resources in the country. Curiously, there has additionally been a sizeable push for the creation of data centres which are additionally heavy consumers of power and water. The supply of water will be a key challenge going ahead for the Indian economy.

For context, the writer is chief economist, Bank of Baroda, and author of Corporate Quirks: The Darker Side of the Sun. Views are personal. © The Indian Express Pvt Ltd.

For now, india's ethanol vision needs a feedstock reality check remains the part of the story worth watching, and further updates are likely as more details are confirmed.