Pune: India’s grain-based ethanol industry is facing mounting pressure from tightening maize supplies and a Re 3-per-litre reduction in procurement rates, raising concerns over production costs and the commercial viability of distilleries as the country expands its ethanol blending programme.
Drought-related supply constraints and competition from poultry feed, starch and food-processing industries have intensified the challenge for ethanol manufacturers. The situation has prompted industry representatives to seek a review of procurement policies and feedstock allocation, The Economic Times reported.
Maize has become an important raw material for India’s grain-based ethanol sector, which has expanded under the government’s ethanol blending programme (EBP). However, growing demand from distilleries, combined with weather-related supply disruptions, is tightening the market and increasing competition for available stocks.
The pressure comes as oil marketing companies (OMCs) have reduced the procurement price of maize-based ethanol by Re 3 per litre for the 2026-27 Ethanol Supply Year, which begins in November. The first procurement tender also excludes ethanol produced from sugarcane juice, syrup and B-heavy molasses, potentially increasing reliance on grain-based feedstocks.
The Grain Ethanol Manufacturers Association (GEMA) has warned that the revised procurement structure could weaken the competitiveness of maize-based ethanol producers, particularly if cheaper rice-based ethanol receives a larger share of procurement allocations.
According to the association, restrictions on sugarcane-based ethanol could increase demand for ethanol produced from surplus rice and damaged foodgrains. GEMA has argued that favouring lower-cost rice-based feedstocks while reducing the maize ethanol incentive could undermine the economics of maize-based production and weaken the market for farmers’ produce.
GEMA president CK Jain has called for procurement prices and allocation policies to be reviewed together, arguing that ethanol producers need a predictable framework that accounts for feedstock costs and supports the viability of their investments.
Meanwhile, the National Egg Coordination Committee (NECC) has highlighted the growing competition between ethanol manufacturers and the poultry industry for maize. It estimates that poultry feed accounts for around 55-60% of India’s total maize consumption and has warned that increasing industrial demand could further tighten supplies available to feed manufacturers.
Agricultural expert GK Sood has also stressed the need to protect maize availability for food and animal feed requirements, cautioning that excessive diversion towards ethanol production could create shortages for poultry producers and increase dependence on imported starch.
The developments underscore the challenge of securing adequate and affordable feedstocks for India’s ethanol expansion. While grain-based distilleries are expected to contribute to the country’s blending targets, their growth will depend on maize availability, competitive procurement prices and a policy framework that balances biofuel production with the needs of other major consumers.
For the ethanol industry, the combination of constrained supplies and lower procurement rates could make maize-based production less attractive unless pricing and allocation mechanisms provide sufficient commercial certainty.
