AIDA has sought a reconsideration of the reduction in the incentive for maize-based ethanol from ₹5.79 per litre to ₹2.79 per litre, which brings the effective procurement rate to ₹68.86 per litre. It said the lower incentive adds to the cost pressures faced by grain-based distilleries amid expenses associated with maize procurement and processing.
The association also called for an upward revision in the procurement price of ethanol produced from surplus rice supplied by the Food Corporation of India (FCI). At the current rate of ₹60.32 per litre, rising raw material, energy, chemical, processing and logistics costs are leaving distillers with limited margins, it said.
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AIDA said procurement prices and incentives should reflect the distinct cost structures and operational requirements of different feedstocks to prevent disproportionate economic advantages for any one source.
Calls for flexibility in sugarcane feedstock use
The industry body has also advocated greater commercial flexibility for sugar mills and distilleries in using sugarcane juice, sugar syrup and B-Heavy molasses, subject to government policy safeguards and the country’s sugar requirements.
It said such flexibility would allow producers to optimise existing capacities, respond to changing market conditions and complement grain-based ethanol production.
AIDA emphasised that the ethanol ecosystem should not become excessively dependent on any single feedstock, particularly amid uncertainty over agricultural output, raw material prices and regional availability.
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The association also flagged the potential impact of El Niño on monsoon patterns, arguing that a diversified feedstock base would help the industry manage agricultural and supply-chain uncertainties while balancing food security, farmer interests and energy security.
Industry seeks predictable policy framework
Vijendra Singh, president of AIDA, said the industry needed appropriate incentives, remunerative pricing and operational flexibility across grain-based and sugarcane-based feedstocks to sustain investments and ensure dependable ethanol supplies.
The association said a calibrated incentive framework would help maintain the commercial viability of maize-based ethanol without giving it preferential treatment over other feedstocks.
Kushal Mittal, vice president of AIDA, said policy incentives and procurement prices should not inadvertently make one feedstock disproportionately attractive at the expense of others. Predictable policies and commercially viable pricing would be important for the industry to contribute reliably to India’s 20% ethanol blending target, he said.
Bharati Balaji, deputy director general of AIDA, separately called for higher procurement prices for FCI rice-based ethanol, citing the pressure of raw material, energy, processing and logistics costs on distillers.
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AIDA said a balanced approach across feedstocks would help sustain investment, support agricultural value chains and strengthen domestic ethanol manufacturing capacity.
The association said it would continue engaging with the Ministry of Petroleum and Natural Gas, the Department of Food and Public Distribution, oil marketing companies and other stakeholders on policy refinements to support the ethanol blending programme.