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Govt notifies modified scheme to produce 1G ethanol


The government on Thursday notified the modified scheme for extending financial assistance for producing “1st generation” (1G) ethanol from feed stocks such as cereals (rice, wheat, barley, corn and sorghum), sugarcane and sugar beet.

Under the scheme, the Centre will provide interest subvention to encourage the funding in this sector. According to the Ministry of Consumer Affairs, Food and Public Distribution, the scheme will attract an investment of about Rs 40,000 crore.

In a statement, the ministry said, “To achieve 20% blending by 2025 as well as to meet out the requirement of ethanol production capacity in the country, the Department of Food & Public Distribution has modified earlier scheme & notified the modified scheme for extending financial assistance to project proponents for enhancement of their ethanol distillation capacity or to set up distilleries for producing 1st Generation (1G) ethanol from feed stocks such as cereals (rice, wheat, barley, corn & sorghum), sugarcane, sugar beet etc. or converting molasses based distilleries to dual feedstock vide notification dated 14th January, 2021.

“To increase production of fuel grade ethanol, Govt. is also encouraging distilleries to produce ethanol from maize; & rice available with Food Corporation of India,” the statement said.

The Ministry said that to avail the assistance under this scheme, the sugar mills/ distilleries/entrepreneurs would be required to submit an application in the prescribed proforma to the Food Department within 30 days from the date of notification of the scheme.

The ministry said states have been asked to promote the scheme “to the entrepreneurs of their state and encourage them to participate in the scheme so that the target set by the Government could be achieved well within the timeline.”

The statement said, “This scheme would not only facilitate diversion of excess sugar to ethanol but would also encourage farmers to diversify their crops to cultivate particularly maize/corn which needs lesser water compared to sugarcane and rice. It would enhance production of ethanol from various feed stocks thereby, facilitate in achieving blending targets of ethanol with petrol and would reduce import dependency on crude oil, thereby, realizing the goal of Atmanirbhar Bharat.”

“It will also enhance income of farmers as setting up of new distilleries would not only increase demand of their crops but would assure farmers of getting better price for their crops,” it said.

The government had earlier fixed a target of 10 per cent blending of fuel grade ethanol with petrol by 2022 & 20 per cent blending by 2030. “Now it has been proposed to prepone the 20% blending of ethanol with petrol by 2025,” the statement said.

According to the ministry, to achieve 20 per cent blending by 2025 and to meet the requirement of chemical & other sectors, about 1,200 crore liters of alcohol / ethanol would be required. “Out of a total requirement of 1,200 crore litres, 700 crore litres is required to be supplied by sugar industry & another 500 crore liters need to be supplied by grain based distilleries,” said the statement.

“To produce 700 crore liters of ethanol by sugar industry, about 60 Lakh Metric Tonne (LMT) of surplus sugar would be diverted to ethanol which would solve the problem of excess sugar, relieve sugar industry from the problem of storage of surplus sugar, & improve the revenue realization of sugar mills which will facilitate them in making timely payment of cane dues of sugarcane farmers,” the statement said.

“To produce 500 crore liters of ethanol/alcohol from food grains, about 125 LMT of food grains would be utilized; this extra consumption of surplus food grains would ultimately benefit the farmers as they will get better price for their produce and assured buyers; and thus will also increase the income of crores of farmers across the country.”

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