(MENAFN- KNN India)
New Delhi, Aug 30 (KNN) In a significant policy overhaul, the government of India has announced the discontinuation of the subsidized rice supply to ethanol manufacturers at Rs 20 per kilogram.
Instead, ethanol producers will now purchase rice at rates determined through weekly auctions.
This shift comes with a cap on the quantity of rice allocated from the Food Corporation of India (FCI) for ethanol production, set at 23 lakh tonnes (lt) until October 31.
This new directive also includes a policy reversal regarding ethanol production from sugarcane. The government has lifted the ban on manufacturing ethanol directly from sugarcane juice and B Heavy molasses, which had been in place since December 2023.
The Food Ministry communicated to sugar mills that while this restriction has been removed, ethanol production must adhere to previously contracted quantities with oil marketing companies (OMCs). Distilleries are also instructed to follow the same quantity restrictions based on their agreements with OMCs.
In an additional memorandum, Sangeet, Director of Sugar at the Food Ministry, has detailed the revised procedure for rice procurement. Distilleries are permitted to participate in the FCI's e-auctions for private traders, provided they comply with set conditions.
The participation in auctions is restricted to the August-October period, with purchases being made at the prevailing auction rates.
FCI will oversee the distribution, ensuring that only up to 23 lt of rice is allocated to ethanol producers.
The policy adjustment has sparked criticism, with some former officials expressing surprise over the cap, especially given that states have been requesting rice at lower, subsidized rates and were recently instructed to procure it at Rs 28 per kilogram.
The recent auction data indicates an average rice price exceeding Rs 30, not including transportation costs.
Since the policy change took effect, FCI has sold approximately 35,000 tonnes of rice in the initial three auctions of the month. In comparison, the total rice sold during the previous fiscal year amounted to 1.96 lakh tonnes.
This shift in policy marks a substantial realignment in India's approach to rice and ethanol production, with implications for both agricultural stakeholders and the broader market.
(KNN Bureau)
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