Canada Questions India at WTO Over Government Rice Used for Ethanol

Canada has questioned India’s use of government-held rice stocks for ethanol production at the World Trade Organization (WTO), seeking details about how much grain has been supplied to distilleries and the prices charged to manufacturers. The inquiry adds to growing international scrutiny of India’s public stockholding programme, which is designed to support farmers and maintain food supplies for vulnerable households.

The questions are expected to be discussed at a meeting of the WTO’s Committee on Agriculture later in November 2026. Canada’s intervention follows similar concerns raised by the United States in September, bringing India’s agricultural support policies, food security commitments and expanding ethanol programme into a wider international trade discussion. <Cite refs={[“turn552819search0″,”turn552819search4”]}/>

Canada Seeks Details of India’s Rice Diversion

Canada has asked India to provide information about the quantity of rice taken from public stocks and supplied to ethanol distilleries since 2020-21. It has also sought details about the prices at which the Food Corporation of India (FCI) sold the grain to ethanol manufacturers.

In its submission, Canada questioned whether using publicly held rice for industrial purposes is consistent with the food security objectives associated with India’s stockholding programme under WTO rules.

The Canadian questions cover three main areas:

• Quantity of rice supplied: How much government-held rice has been diverted to ethanol production since 2020-21, including during the 2026-27 supply year?
• Sale prices: At what prices has the FCI supplied rice to ethanol distilleries?
• Procurement planning: Do India’s government procurement targets account for anticipated demand from ethanol manufacturers?

Canada also wants India to explain how it accounts for the support provided through minimum support price (MSP) procurement when rice purchased under the programme is subsequently used for industrial purposes.

The questions do not amount to a formal WTO ruling against India. They are requests for clarification from another member country and will form part of the WTO’s agricultural policy discussions. <Cite refs={[“turn552819search0”]}/>

Why Government Rice Is Being Used for Ethanol

India’s rice-to-ethanol programme connects two major government priorities: foodgrain management and reducing dependence on imported crude oil.

The government purchases paddy from farmers at the MSP and maintains stocks through the FCI. These stocks support the Public Distribution System (PDS), the National Food Security Act and other welfare programmes.

However, when government warehouses hold more grain than is required to meet prescribed food security obligations and buffer stock norms, surplus supplies can be released through different channels.

One such channel is the ethanol industry.

Ethanol is blended with petrol to reduce the country’s dependence on imported petroleum products. Rice can be processed into ethanol, providing distilleries with another source of raw material alongside maize, sugarcane-based feedstocks and damaged foodgrains.

The government has defended the use of FCI rice, arguing that food security requirements are met before surplus stocks are approved for industrial use.

In a July 31, 2026 statement, the Ministry of Petroleum and Natural Gas said rice is made available for ethanol only after requirements under the PDS, the National Food Security Act, welfare schemes and mandatory buffer stocks have been fulfilled.

The ministry also said that the programme uses multiple feedstocks rather than depending exclusively on government rice. <Cite refs={[“turn552819search5”]}/>

US Raised Similar Questions in September

Canada’s intervention follows a similar inquiry by the United States at the WTO in September 2026.

Washington questioned whether India was complying with the conditions attached to its public stockholding programme while releasing government-procured rice for non-food purposes.

The US argued that India’s price support policies had contributed to domestic rice supplies exceeding food consumption requirements. It also questioned the practice of selling government-held rice below its acquisition cost to industrial users.

According to the US submission reported by The Economic Times, India increased allocations of FCI-held rice to ethanol manufacturers during 2025-26 as government stocks rose.

Washington sought a breakdown of government spending on public stockholding, foodgrain distribution and subsidised sales to industrial users, including ethanol producers.

The US also questioned how India’s rice procurement and release policies fit within the conditions of the WTO’s public stockholding framework.

These concerns are part of a wider disagreement over India’s agricultural subsidies, including the way the country calculates and reports government support for rice and wheat. <Cite refs={[“turn552819search2″,”turn552819search1”]}/>

What WTO Rules Say About Public Food Stocks

The dispute centres on the WTO Agreement on Agriculture and the rules governing government procurement of foodgrains for public stockholding programmes.

India purchases rice from farmers at administered prices, including the MSP. Such support can count towards the domestic agricultural subsidy limits established under WTO rules.

For developing countries, the general de minimis threshold for product-specific support is 10% of the value of production. When notified support exceeds the applicable limit, the country may face questions from other WTO members.

India has previously reported that its rice support exceeded the threshold and has relied on a protection mechanism agreed at the WTO’s 2013 Bali Ministerial Conference.

Understanding the Bali Peace Clause

The Bali Decision, commonly known as the peace clause, provides certain protections to developing countries operating public stockholding programmes for food security purposes.

Under the arrangement, qualifying programmes receive protection from certain WTO dispute-settlement challenges related to exceeding domestic support limits, provided specified conditions are met.

These include transparency and notification requirements and safeguards intended to prevent the programmes from distorting trade or adversely affecting the food security of other WTO members.

The central question raised by Canada is whether selling publicly procured rice for ethanol production fits within the food security purpose of the programme and the conditions attached to the protection India invokes.

Importantly, the Bali Decision does not establish a blanket prohibition on using rice for ethanol. The concern is whether India’s overall procurement, subsidy and stock-release arrangements comply with the applicable WTO commitments. <Cite refs={[“turn552819search1″,”turn552819search9”]}/>

India’s Ethanol Programme Faces a Changing Supply Environment

India has expanded ethanol blending as part of its strategy to reduce crude oil imports, support domestic agriculture and strengthen energy security.

The government advanced its target of achieving 20% ethanol blending in petrol from 2030 to the 2025-26 supply year. The Petroleum Ministry said average blending reached 20% during November 2025 to June 2026.

Government figures also show that FCI rice became a more significant feedstock during this period. According to the ministry’s July statement, its share of ethanol production increased from just 0.02% in the 2023-24 supply year to 24.64% in 2025-26.

The government attributed the increase to the availability of surplus stocks after food security requirements had been met.

However, the programme is facing supply pressures. A November 4 Reuters report said weak monsoon rainfall and rising agricultural commodity prices were affecting the availability of maize and sugarcane, creating uncertainty for ethanol production in the current supply year.

The report also highlighted concerns about the cost of using government rice as an alternative feedstock, given the difference between its procurement and sale prices. <Cite refs={[“turn552819search5″,”turn552819news8”]}/>

The Bigger Picture

Canada’s questions demonstrate how domestic agricultural policies can become international trade issues when government support affects the availability and pricing of commodities.

India’s position is that public procurement protects farmers and ensures foodgrain availability for vulnerable households, while surplus stocks can also support industrial uses and energy security. Other WTO members, meanwhile, want greater transparency about how much publicly supported grain enters commercial markets and whether the arrangements meet international subsidy rules.

The discussion also highlights a broader challenge for India: balancing food security, farmer incomes, ethanol production and compliance with international trade commitments. The outcome could influence how the country manages its grain reserves and explains its agricultural support policies to trading partners.

Looking Ahead

The WTO Committee on Agriculture is expected to take up Canada’s questions later in November 2026. India’s response will be important in clarifying the quantity of rice supplied to distilleries, the pricing arrangements and how the government accounts for MSP-linked support when stocks are released for industrial use. The discussion will also build on the concerns previously raised by the United States.

For India, the issue is not simply whether rice can be converted into ethanol. It concerns how government-procured grain is managed under a programme justified by food security objectives. Greater transparency could help address questions from trading partners, while any disagreement over compliance may keep India’s agricultural subsidies and public stockholding policies under international scrutiny.