To meet the ambitious target of 20 per cent ethanol blending with petrol by 2030 from less than 10 per cent currently, the Union Cabinet today extended the soft loan scheme for capacity expansion to distilleries that use crops other than sugarcane as their feedstock that includes rice, maize, sorghum, wheat, barley, corn and sugar beet.
So far, the soft loan scheme for capacity expansion was available for integrated and standalone distilleries that produced ethanol only from sugarcane.
“The total cost to exchequer due to this extension will be around Rs 4,573 crore,” Petroleum Minister Dharmendra Pradhan told reporters after the meeting of the cabinet.
Under the soft loan scheme, Central government gives a subvention of 6 per cent if the rate of interest is 12 per cent or more and if the rate of interest is less than 12 per cent, then it gives a subvention upto 50 per cent of that amount.
The scheme will be available even for those sugar mills that want to produce ethanol from both sugarcane and non-sugarcane sources.
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In the soft loan scheme so far, around 120 sugar mills have applied for loans for capacity expansion and good number of them have already received the funds.
India at present allows production of ethanol from both sugarcane and non-sugarcane sources that primarily include grains, maize and some other items.
Government has fixed target of 10 per cent blending of fuel grade ethanol with petrol by 2022, 15 per cent blending by 2026 and 20 per cent blending by 2030.
However, industry sources said to achieve the target of 20 per cent ethanol blending with petrol, just relying on sugarcane as a feedstock won’t be enough and the share of non-sugarcane sources in ethanol production needs to be ramped up.
But, this will not be possible as distilleries didn’t have adequate capacity to produce ethanol from non-sugarcane sources.