FCI Rice Cheaper for Distilleries Than Public Raises Policy Concern

New Delhi: Rice from the Food Corporation of India (FCI) is being supplied to private distilleries at prices even lower than those charged to ordinary citizens—a fact brought to light in the Union Government’s response to a Starred Question in the Rajya Sabha raised by MP Dr. John Brittas. The disclosure reveals a troubling structural flaw in the Centre’s ethanol-driven biofuel policy, raising questions over whether corporate interests are being prioritized over public food security.

According to the reply, the Government admitted that rice from FCI has been allocated to private distilleries for ethanol production at a reserve rate of 20 per kg (2000 per quintal) in 2022–23 and 22.50 per kg (2250 per quintal) in 2024–25, with a further increase to 23.20 per kg (2320 per quintal) planned for 2025–26. During the 2024–25 financial year alone, 31.83 lakh metric tonnes of rice were diverted to ethanol manufacturing.

What makes this revelation particularly alarming is the stark contrast with paddy procurement rates paid to India’s farmers. The Minimum Support Price (MSP) stands at 20.40 per kg in 2022–23, 23.00 in 2024–25, and 23.69 in 2025–26—meaning the Government is enabling processed rice to be sold to private distillers at a price lower than what farmers receive for unprocessed paddy. This inversion of value raises fundamental equity concerns within the supply chain, especially when public procurement is intended to safeguard farmer incomes and food availability.

Compounding the issue, State Governments are obligated under the Open Market Sale Scheme (OMSS) to procure rice from FCI at the same fixed reserve rates, bearing additional costs of logistics, distribution, and handling. This compulsion forces States to sell rice to the public at higher prices—often around or above 25 per kg—even under subsidized conditions. In contrast, corporate distilleries continued to receive rice at only 20–22.50 rupees per kg. This policy framework effectively grants private entities preferential access to food grains over economically vulnerable citizens.

Additionally, the Government dismissed questions regarding reports of insects or beetles damaging fuel lines due to ethanol content in petrol, stating that no such incidents were officially reported.