India opens six-month window for sugar mills to submit ethanol proposals and avail loans at low interest rates

The Centre has opened a six-month window till October 2022 for sugar mills to submit fresh proposals to avail loans at a subsidised interest rate for setting up new distilleries or expanding the existing facilities for augmenting first-generation ethanol capacity in the country.

To ensure that only serious project proponents are issued in-principle approval by the Union Food Ministry, a window has been opened for fresh applications from those project proponents who have acquired land for projects and obtained environmental clearance, it said.

According to the Food Ministry, the decision will facilitate sugar mills to set up new distilleries or expand their existing distilleries and thereby help in diverting excess sugarcane/sugar to ethanol.

“New grain-based distilleries would come up in deficit states like north-eastern states, southern states like Tamil Nadu, Andhra Pradesh, Telangana and states like Bihar, Madhya Pradesh etc. This would help in the distributed production of ethanol,” the ministry said in a statement.

The government is implementing a scheme since 2018 to offer soft loans to sugar mills and distilleries with an aim to increase ethanol output and its supply under Ethanol Blended with Petrol (EBP) Programme, especially during the surplus season and thereby improving the liquidity position of the sugar mills enabling them to clear cane price arrears of the farmers.

Under this scheme, the government is extending financial assistance in the form of interest subvention at 6 per cent annum or 50 per cent of the rate of interest charged by banks, whichever is lower, on the loans to be extended by banks for five years including one-year moratorium.

At present, the country has a total ethanol production capacity of 849 crore litres, which includes 569 crore litres of molasses-based distilleries and 280 crore litres of grain-based distilleries, it added. There has been an eight-time increase in the production of fuel-grade ethanol and its supply to oil marketing companies (OMCs) from 2013-14 to 2020-21.

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