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Centre mulls extending soft loans to grain-based distilleries

Monday, 26 Oct 2020
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The Central government is considering extending subsidised loans to grain-based distilleries also under the ongoing scheme.

The Petroleum and Food Ministries are of the view that ethanol production cannot be dependent on one feedstock, that is, sugarcane, for achieving the target of 20 percent ethanol blending with petrol by 2030.

As part of an incentive scheme announced in June 2018, the Centre had approved soft loans for sugar mills to set up new distilleries or upgrade the existing ones, expand capacity and encourage them to divert sugarcane to ethanol making.

Under the scheme, the government has extended twice the interest subvention that comes up to Rs 4,600 crore for a loan amount of Rs 22,000 crore.

A proposal to modify the existing scheme to include grain-based distilleries will require the Union Cabinet approval, preparation for which is going on at present.

When the scheme was launched in 2018, the government had approved soft loans to sugar mills for augmenting about 195 crore ltr of ethanol capacity. Out of which, 101 crore ltr capacity is available for use now and the balance will be ready by 2022.

In September-October 2020, the government received about 400 applications from sugar mills for installation of 400 crore ltr ethanol capacity availing soft loan facility under the scheme. The applications are being vetted now.

In the wake of enhanced ethanol capacities and good cane crop, the government has estimated that over 300 crore ltr plus ethanol will be available for blending in 2020-21, much higher than 180 crore litres in 2019-20.

Currently, India has a total 426 ethanol capacity, of which about 130 crore ltr capacity is used for making other products like portable liquor and sanitisers. The rest is available for ethanol making.

With an expected increase in supply of ethanol in 2020, the government hopes to achieve the target of 10 percent ethanol blending in 2020-21.

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