Govt notifies modified scheme on ethanol production to assist distilleries

The government on Thursday notified a "modified" scheme to provide financial assistance to distilleries producing first-generation ethanol from feedstocks, including cereals.

The assistance will be given for capacity expansion, setting up of new ethanol distilleries or converting molasses-based distilleries to dual feedstock.

In a statement, the government said sugar mills, distilleries or entrepreneurs are required to submit an application in a prescribed proforma to the Union Food Ministry within 30 days from the notification for availing the assistance under the scheme.

Sugarcane and ethanol are produced mainly in three states -- Uttar Pradesh, Maharashtra and Karnataka. Transporting ethanol to far-flung states from these three states involves huge transportation cost, it said.

"By bringing new grain-based distilleries in the entire country would result in the distributed production of ethanol and would save a lot of transportation cost and thus prevent delays in meeting the blending target and would benefit the farmers across the country," it added.

The statement said the state governments have been asked to promote the scheme and encourage entrepreneurs to participate in the plan so that the target set for ethanol production could be achieved well within the timeline.

The state governments have also been requested to facilitate entrepreneurs in arranging land for the project, get environmental clearance at the earliest and setting up of distilleries.

The industry associations have also been requested to promote the scheme and encourage their members to participate in it, the statement said.

Under the scheme, the government will bear interest subvention for five years, including one-year moratorium against the loan availed by project proponents from banks at 6 per cent per annum or 50 per cent 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.

For ethanol production, there is sufficient availability of feedstocks and the government has also fixed remunerative prices of ethanol derived from various feedstocks.

Further, the government said it has proposed to prepone 20 per cent blending of ethanol with petrol by 2025.

India will need about 1,000 crore litre of ethanol for doping in petrol by 2030 with a view to cut dependency on imports for meeting oil needs, it said, adding that the nation currently has a capacity of 684 crore litres.