Modified Ethanol Interest Subvention Scheme

March 8, 2025

The Government of India has introduced a modified Ethanol Interest Subvention Scheme. This initiative aims to enhance the operational viability of Cooperative Sugar Mills (CSMs). The scheme allows these mills to convert their existing sugarcane-based ethanol plants into multi-feedstock facilities. This enables the use of grains such as maize and damaged food grains (DFG) alongside sugarcane. The goal is to ensure continuous operation and improve productivity throughout the year.

Ethanol Production in India

Ethanol production in India primarily relies on sugarcane. However, sugarcane has a limited crushing period of only 4-5 months each year. This restricts the operational capacity of sugar mills. The government has sought to diversify feedstocks to maintain consistent production levels. The Ethanol Blended Petrol (EBP) Programme aims for 20% ethanol blending with petrol by 2025.

Modified Ethanol Interest Subvention Scheme

Under this scheme, the government offers interest subvention at 6% per annum or 50% of the bank interest rate. This support is applicable for loans extended by banks or financial institutions over five years, including a one-year moratorium. This financial assistance encourages CSMs to expand their operations beyond sugarcane.

Benefits of Multi-Feedstock Conversion

The conversion to multi-feedstock plants allows CSMs to utilise various raw materials. This flexibility enhances operational efficiency. It also improves the financial viability of these mills. By processing grains and agricultural residues, CSMs can maintain production even during the off-season for sugarcane.

Impact on Ethanol Production Targets

The government has set ambitious targets for ethanol production. The EBP Programme is a critical component of India’s energy strategy. As of February 2025, the blending rate reached 19.6%. This indicates progress towards the 20% target. Enhanced production capabilities from CSMs will play a vital role in achieving this goal.

Future Prospects for Cooperative Sugar Mills

The modified scheme opens new avenues for CSMs. By diversifying their feedstock, these mills can enhance their sustainability. The initiative promotes the use of locally available grains, which can reduce dependence on sugarcane. This strategic shift is expected to contribute positively to the overall agricultural economy.

« Previous Post Next Post »