India's Ethanol Blending Falls Below Target Due to Weak Monsoon

India's ethanol blending programme faces setbacks as this year's monsoon was the weakest in over a decade, according to industry insiders. This has led to a shift in government focus toward food security ahead of ethanol production.

The E20 petrol initiative, aimed at replacing 20% of imported fuel with domestic ethanol, is expected to fall short of its target. Officials said the ethanol production rate is projected to drop below 20% for the current supply year.

A severe El Niño event contributed to the monsoon shortfall, causing rainfall to drop by nearly 13% from normal levels. This has led to significant increases in the prices of corn, sugar, and rice, with food inflation rising to 7.74% in September.

Experts warned that the scarcity of feedstocks could push ethanol blending to around 15% in the current supply year. G.K. Sood, a food policy expert, said food must take priority over fuel during drought years, especially for a country with a large population.

The government has stockpiles of rice that could be used as an alternative feedstock, but doing so would be costly. Officials said the government sells rice to ethanol producers at half the price it pays to store it.

Ethanol producers, who expanded capacity to 20 billion litres a year, are now facing overcapacity due to lower blending rates. This has raised concerns about financial strain and the availability of animal feed, according to industry representatives.