Government gives soft loans for ethanol to non-sugarcane distilleries
In order to achieve the ambitious goal of a 20 percent admixture of ethanol to gasoline by 2030 of currently less than 10 percent, the Union Cabinet today extended the low-interest loan regime to expand capacity to include distilleries that use plants other than sugar cane as a raw material, including rice and corn , Sorghum, wheat, barley, corn and sugar beet.
Previously, the low-interest loan was available to expand capacity for integrated and stand-alone distilleries that only produced ethanol from sugar cane.
“The total cost to the state treasury due to this expansion will be around 4.573 billion rupees,” Petroleum Minister Dharmendra Pradhan told reporters after the cabinet meeting.
Under the soft loan program, the central government grants a subsidy of 6 percent if the interest rate is 12 percent or more, and if the interest rate is less than 12 percent it grants a subsidy of up to 50 percent thereof.
The program will even be available to those sugar mills that want to produce ethanol from both sugar cane and non-sugar cane sources.
As part of the soft loan program, around 120 sugar factories have applied for capacity expansion loans so far, and many of them have already received the funds.
India currently allows the production of ethanol from both sugarcane and non-sugarcane sources, which mainly include grains, corn and a few other products.
The government’s goal is to mix 10 percent fuel-grade ethanol with gasoline by 2022, 15 percent by 2026, and 20 percent by 2030.
However, industry sources said they would meet the goal of a 20 percent blending of ethanol with gasoline. Relying solely on sugar cane as a raw material will not be enough and the proportion of non-sugar cane sources in ethanol production will need to be increased.
However, this will not be possible because the distilleries did not have sufficient capacity to produce ethanol from non-sugar cane sources.
It is estimated that India will need around 11 billion liters of ethanol to achieve its 20 percent blending target by 2030. Of this, sugar cane can contribute around 6 billion liters, as there are limits to which arable land can be diverted.
To make up for the remaining 4-5 billion liters, the government will have to resort to other sources of raw materials, including excess rice, corn, sorghum, sugar beet, etc.
The current production capacity of non-sugarcane ethanol in India is around 0.25-0.30 billion liters, which will need to be increased to 3-4 billion liters to meet the new demand.
“According to today’s decision, these additional capacities will be created in both integrated and stand-alone distilleries, which on the one hand help to achieve the blending target and at the same time create ethanol production capacities in non-sugar cane, but rice and corn surplus countries of Bihar. West Bengal, etc., ”commented a senior representative of the industry.
He said while plants use other sugar cane sources to make ethanol, plants first convert the raw material, which contains a high amount of starch, which is then converted to sugar and then to ethanol.