Centre notifies modified financial assistance scheme to ramp up ethanol distillation

Our Bureau New Delhi | Updated on January 14, 2021 Published on January 14, 2021

The Department of Food and Public Distribution has notified a modified scheme for extending financial assistance for expansion of ethanol distillation capacity. This scheme will also facilitate setting up of distilleries to produce first generation ethanol from feed stocks such as rice, wheat, barley, corn and sorghum.

This scheme has also been notified to achieve 20 per cent blending of ethanol by 2025, a target set by the Centre.

The Department of Food and Public Distribution (DoFPD) has asked all state governments to promote the scheme and facilitate entrepreneurs in getting land for the project, and get environment clearance to be able to set up distilleries at the earliest.


Industry associations have also been requested to promote the scheme and encourage their members to participate in the scheme.

“Under the scheme, Government would bear interest subvention for five years, including a one-year moratorium against the loan availed by project proponents from banks at the rate of 6 per cent annum or 50 per cent of the rate of interest charged by banks, whichever is lower, for setting up of new distilleries, expansion of existing distilleries or converting molasses-based distilleries to dual feedstock,” the official statement added.

The government believes this will bring an investment of about Rs 40,000 crore and expects generation of new employment opportunities in rural areas. Stating that ethanol projects are viable, the DoFD added that there is sufficient feed stock and remunerative prices have been fixed for ethanol derived from various feedstocks.


“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 need less water than sugarcane and rice," the statement said.

"It would enhance production of ethanol from various feedstocks, thereby, facilitating blending targets of ethanol with petrol and would reduce import dependency on crude oil, thereby, realising the goal of Atmanirbhar Bharat,” the official statement added.

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Published on January 14, 2021
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