Ministry of Consumer Affairs, Food & Public Distribution noted in a latest update that in next few years with 20% ethanol blending with petrol, Government will be able to reduce import of crude oil, a step towards being Atma Nirbhar in the Petroleum sector and this will also help in increasing the income of farmers and creating additional employment in distilleries. In a normal sugar season, about 320 LMT of sugar is produced against domestic consumption of 260 LMT. This 60 LMT of surplus sugar which remains unsold, blocks funds of sugar mills to the tune of about Rs. 19,000 crore every year thereby affecting liquidity positions of sugar mills resulting in accumulation of cane price arrears of farmers. To deal with surplus stocks of sugar, sugar-mills are being encouraged by the Government to export sugar, for which Government has been extending financial assistance.
However, India being a developing country can export sugar by extending financial assistance for marketing and transport only up to year 2023 as per WTO arrangements. So, as a long term solution to deal with surplus sugar, to improve sustainability of sugar industry and to ensure timely payment of cane dues to farmers, Government has been encouraging diversion of excess sugarcane & sugar to ethanol for supplying to Oil Marketing Companies for blending with petrol which not only would reduce import dependency on crude oil, promote ethanol as a fuel which is indigenous & non polluting, but will also enhance income of sugarcane farmers.
Earlier, the Government had fixed a target of 10% blending of fuel grade ethanol with petrol by 2022 and 20% blending by 2030 but now Government is preparing a plan to prepone achievement of 20% blending target. However, as the existing ethanol distillation capacity in the country is not sufficient to produce ethanol to achieve blending targets, Government is encouraging sugar mills, distilleries and entrepreneurs to set up new distilleries and to expand their existing distillation capacities and is also extending financial assistance by way of interest subvention for 5 years at 6% maximum rate of interest against the loans availed by sugar mills/ distilleries from banks for setting up their projects.
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