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New Delhi : To achieve 20% blending by 2025 as well as to meet  the requirement of ethanol production capacity in the country, the Department of Food & Public Distribution (DFPD) , Government Of India, on January 14, 2021, modified earlier scheme and  notified the modified scheme for extending financial assistance to project proponents for enhancement of their ethanol distillation capacity or to set up distilleries for producing 1st Generation (1G) ethanol from feedstocks such as cereals (rice, wheat, barley, corn & sorghum), sugarcane, sugar beet etc. or converting molasses based distilleries to dual feedstock.

For availing assistance under this scheme, the sugar mills/ distilleries / entrepreneurs would be required to submit an application in the prescribed proforma to DFPD within 30 days from the date of notification of the scheme online on the DFPD portal (https://sugarethanol.nic.in).

The Chief Secretaries of all State Governments/ UTs have been requested to encourage the entrepreneurs of their respective state to participate in the scheme so that the target set by the Government could be achieved well within the timeline. State Governments have also been requested to facilitate entrepreneurs in arranging land for the project, to get environment clearance at the earliest, and in setting up of distilleries. Industry Associations have also been requested to promote the scheme and encourage their members to participate in the scheme, according to a PIB release.

Under the scheme , Government would bear interest subvention for five years including one year moratorium against the loan availed by project proponents from banks @ 6% per annum or 50% of the rate of interest charged by banks whichever is lower for setting up of new distilleries or expansion of existing distilleries or converting molasses based distilleries to dual feedstock. This will bring an investment of about Rs 40,000 crore.

Due to upcoming investment in capacity addition / new distilleries, various new employment opportunities will be created in rural areas.For production of ethanol, there is sufficient availability of feedstocks; & Government has also fixed remunerative prices of ethanol derived from various feedstocks. Moreover, OMCs being the assured buyer for ethanol has given comfort for purchase of ethanol from distilleries for next 10 years.

This scheme would not only facilitate diversion of excess sugar to ethanol but would also encourage farmers to diversify their crops to cultivate particularly maize/corn which needs lesser water compared to sugarcane and rice.

Sugarcane and ethanol is produced mainly in three states viz Uttar Pradesh, Maharashtra, and Karnataka. Transporting ethanol to far flung States from these three states involves huge transportation cost.  By bringing new grain based distilleries in the entire country would result in distributed production of ethanol and would save a lot of transportation cost and thus prevent delays in meeting the blending target and benefit the farmers across the country.

With a view to supporting sugar sector and in the interest of sugarcane farmers, the Government has also allowed production of ethanol from B-Heavy Molasses, sugarcane juice, sugar syrup, and sugar; and has been fixing the remunerative ex-mill price of ethanol derived from C-heavy molasses, B-heavy molasses and ethanol derived from sugarcane juice/ sugar/ sugar syrup for ethanol season. To increase production of fuel grade ethanol, the Govt. is also encouraging distilleries to produce ethanol from maize & rice available with Food Corporation of India.

Now it has been proposed to prepone the 20% blending of ethanol with petrol by 2025. To achieve 20 % blending by 2025 and to meet the requirement of chemical and  other sectors, about 1,200 crore liters of alcohol / ethanol would be required of which 900 crore liters would be required to achieve 20% blending & 300 crore liters would be the requirement of chemical & other sectors.

Out of total requirement of 1,200 crore liters, 700 crore liters is required to be supplied by sugar industry and  another 500 crore liters need to be supplied by grain based distilleries.