Centre Extends Ethanol subsidy scheme till March 2023

The Centre has extended the timeline for disbursement of loans up to March 31 under the ethanol blending programme interest subsidy scheme, notified first in 2018, to facilitate entrepreneurs to complete their projects while availing of government support.

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The Ministry Response:

The Food Ministry issued a notification on October 6 stating the applicants who have submitted their applications to DFPD after the date of notification of the scheme but within the cut-off date prescribed in the notification. Loans were disbursed to them prior to the in-principle approval of DFPD, will also be eligible for interest subvention under the scheme. The applicants have been asked to complete their projects within two and half years after receiving their first instalment, said the notification.

Need of 20% Ethanol Blending :

Immense benefits can accrue to the country by 20% ethanol blending by 2025, such as saving Rs 30,000 crore of foreign exchange per year, energy security, lower carbon emissions, better air quality, self-reliance, use of damaged foodgrains, increasing farmers’ incomes, employment generation, and greater investment opportunities.

The E-20 roadmap proposes the following milestones:

• Raise pan-India ethanol production capacity from the current 700 to 1500 crore litres
• Phased rollout of E10 fuel by April 2022
• Phased rollout of E20 from April 2023, its availability by April 2025
• Rollout of E20 material-compliant and E10 engine-tuned vehicles from April 2023
• Production of E20-tuned engine vehicles from April 2025
• Nationwide educational campaign
• Encourage use of water-sparing crops, such as maize, to produce ethanol
• Promote technology for the production of ethanol from non-food feedstock.

Govt Approach:

The Centre has notified different interest subvention schemes for sugar mills and distilleries during 2018-2021, with a view to increasing production of ethanol and its supply under Ethanol Blended with Petrol (EBP) Programme, especially in the surplus season. This will also improve the liquidity position of the sugar mills enabling them to clear cane price arrears of farmers. The government is extending financial assistance in the form of interest subvention at 6 per cent per annum or 50 per cent of rate of interest charged by banks, whichever is lower, on the loans to be extended by banks for five years, including one-year moratorium. With the vision to boost agricultural economy, reduce dependence on imported fossil fuel, save foreign exchange on account of crude oil import bill and reduce air pollution, the government has fixed target of 10 per cent blending of fuel grade ethanol with petrol by 2022, and 20 per cent by 2025.