Ethanol Plant: Interest Subvention for Cooperative Sugar Mills announced

In a significant move to enhance ethanol production and support cooperative sugar mills, the Central Government has announced a modified scheme to facilitate the conversion of existing sugarcane-based ethanol plants into multi-feedstock plants. This will enable the use of grains like maize and damaged food grains (DFG) to increase ethanol output under the Ethanol Blended with Petrol (EBP) Programme.

The scheme, exclusively for Cooperative Sugar Mills (CSMs) across the country, aims to improve liquidity, clear cane price arrears, and boost ethanol supply. Only cooperative mills with existing, running ethanol plants having valid Consent to Operate (CTO) and Petroleum and Explosives Safety Organization (PESO) licenses will be eligible for assistance.

Under this initiative, the government will provide an interest subvention of 6% per annum or 50% of the interest rate charged by financial institutions (whichever is lower) for five years, including a one-year moratorium.

Loan assistance under this scheme will be available only for projects that have been sanctioned and approved by the Department of Food and Public Distribution (DFPD). The interest subvention will be applicable exclusively to loans that have been properly sanctioned and disbursed for the specific purpose of ethanol capacity conversion.

To ensure a steady supply for fuel blending, cooperative sugar mills availing benefits under this scheme must commit to supplying at least 75% of their ethanol production from their converted plants to Oil Marketing Companies (OMCs) for petrol blending.

The application process requires eligible cooperative sugar mills to submit their applications within six months of the scheme’s notification date through the National Single Window System (NSWS) portal. This streamlined process aims to make it easier for mills to access financial support.

For approval and monitoring, a Screening Committee will be formed by the DFPD to scrutinize all applications and ensure compliance with eligibility criteria. Any sugar mills that have pending government dues will be required to clear those dues before receiving approval under this scheme.

Regarding the project timeline, approved sugar mills must disburse loans within one year of receiving in-principle approval. Additionally, they must complete the ethanol plant conversion project within two years from the date of the first loan installment disbursement.

The interest subvention payments will be managed by the DFPD, which will release the funds quarterly to NABARD, the designated nodal bank for this scheme. However, cooperative sugar mills that have been classified as Non-Performing Assets (NPAs) will not be eligible to receive the interest subvention benefits.

Finally, to ensure transparency and accountability, completion and utilization certificates will be required. Cooperative sugar mills must obtain clearance from pollution control authorities and submit a certification confirming the successful conversion of the plant. They must also submit utilization certificates within six months of project completion to verify that the loan funds were used appropriately.

The scheme aligns with the government’s broader goal of boosting ethanol production, reducing dependence on fossil fuels, and improving financial stability in the sugar sector. By incentivizing multi-feedstock ethanol production, the initiative is expected to strengthen India’s biofuel economy and support farmers.