Govt permits sale of 2.3 mn tonne of rice from FCI to ethanol makers

The government on Thursday permitted the sale of up to 2.3 million tonnes of rice from Food Corporation of India (FCI) stocks to grain-based ethanol distilleries, reversing a ban imposed last year.

The food ministry, as per a directive, has allowed ethanol producers to participate in e-auctions and purchase rice between August and October 2024 under the Open Market Sale Scheme (OMSS).

This decision comes as the government grapples with surplus rice stocks exceeding 540 lakh tonnes, prompting efforts to create storage space for the upcoming harvest.

The ministry stated, "Maximum 23 lakh tonne may be allowed for lifting to ethanol distilleries."

Ethanol makers can purchase rice through weekly e-auctions. Purchases are subject to ethanol allocation by oil manufacturing companies.

The government had halted rice sales for ethanol production in July 2023. The ban coincided with restrictions on non-basmati white rice exports.

The FCI has been conducting e-auctions for rice sales to private traders since last July to manage the surplus inventory.

This move signals a shift in the government's stance on using foodgrains for biofuel production as it balances food security concerns with the need to manage excess stocks.