Modified Scheme To Enhance Ethanol Distillation Capacity

• 20 Jan 2021

• To achieve 20% blending by 2025 as well as to meet out the requirement of ethanol production capacity in the country, the Department of Food & Public Distribution has modified earlier scheme & 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 feed stocks such as cereals (rice, wheat, barley, corn & sorghum), sugarcane, sugar beet etc. or converting molasses based distilleries to dual feedstock.
• 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.

Objective of this Scheme

• To boost agricultural economy
• To reduce dependence on imported fossil fuel
• To save foreign exchange on account of crude oil import bill
• To reduce the air pollution

Benefits of Grain based Distilleries

• 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 & would benefit the farmers across the country.

Targets (Now & Then)

• The Government had fixed target of 10% blending of fuel grade ethanol with petrol by 2022 & 20% blending by 2030.
• Now it has been proposed to prepone the 20% blending of ethanol with petrol by 2025.