Government announces modified ethanol scheme to boost year-round production at cooperative sugar mills

The union food ministry on Friday said it has come out with a scheme to help cooperative sugar mills convert their sugarcane-based ethanol plants into multi-feedstock facilities, enabling year-round operations using grains such as maize and damaged food grains.

The initiative, announced under the modified Ethanol Interest Subvention Scheme, will provide interest subsidies of 6 per cent per annum or 50 per cent of bank interest rates, whichever is lower, for five years including a one-year moratorium period.

"This conversion will allow cooperative sugar mills to maintain operations beyond the typical 4-5 month sugarcane crushing season," the ministry said in a statement.
The measure aims to support the government's Ethanol Blended with Petrol (EBP) Programme, which targets 20 per cent ethanol blending with petrol by 2025.

The ministry said the scheme addresses operational inefficiencies at cooperative sugar mills by enabling them to process alternative feedstocks when sugarcane is unavailable, improving their financial viability and contributing to national biofuel targets.

"The sugarcane crushing period is limited to 4-5 months only in a year due to which sugar mills can operate for a limited period of time. This further leads to reduction in their overall operational efficiency and productivity.

"To ensure the functioning of Cooperative Sugar Mills throughout the year, their existing ethanol plants can be converted into multi-feedstock based plants to use grains like maize and DFG under the new modified scheme," it added.

The government has implemented various ethanol interest subvention schemes since July 2018, as part of its push toward greater energy independence and reduced fossil fuel imports.