In a move that may help the country solve many problems, the Cabinet Committee on Economic Affairs (CCEA) on Wednesday decided to extend additional financial assistance of ₹4,573 crore for setting up distilleries to produce more ethanol in the country.
As per the decision, the government would bear interest subvention for five years including one year moratorium against the loan availed by firms for setting up the distilleries — based on sugarcane or foodgrains — from banks at a rate of 6 per cent per annum or 50 per cent of the rate of interest charged by banks whichever is lower, said Dharmendra Pradhan, Minister for Petroleum and Natural Gas on Wednesday.
Interest subvention would be available to only those distilleries which will supply at least 75 per cent of ethanol produced from the added distillation capacity to oil marketing companies. This is in addition to an interest subvention scheme announced by the government for ethanol production, he added.
The measure will help India produce as much as 1,400 crore litre of ethanol. While 1,000 crore litre of ethanol will be used for blending with petrol and thus reduce forex outflow for buying oil and enhance incomes of farmers, the remaining 400 crore litre will be used as chemical industry feedstock, he said.
Raising capacity
According to the government, a total of 1,750 crore litre of ethanol can be produced with an investment of ₹40,000 crore and some investment has already happened, said Pradhan.
The move is expected to reduce the excess production of sugar and thus ease pressure on sugar price in the country. Sugar industry annually produces nearly 60 lakh tonnes excess sugar, which remains unsold - blocking funds of sugar mills to the tune of ₹19,000 crore, affecting their ability to pay farmers.
The interest subvention scheme will be available for setting up stand-alone grain-based distilleries using dry milling process or capacity expansion, molasses-based distilleries which adopt zero liquid discharge technologies, and putting up dual feed (sugarcane as well as grains) distilleries, a statement said.