Government Gives Additional Soft Loan of Rs 7,400 crore to Sugar Mills for Ethanol Expansion

Here comes good news for the sugar mills. The government is thinking to give an additional soft loan of Rs 7,400 crore to sugar mills. These efforts will be taken for creating ethanol capacity under a recently launched scheme, the sources said.

Under the scheme launched in June for expansion and setting up of new ethanol plants, The Food Ministry is also considering tweaking the scheme to ensure that non-molasses-based distilleries are also able to avail soft loans.

Under the scheme, the government had announced a soft loan of Rs 4,400 crore and provided an interest subvention of Rs 1,332 crore to mills over a period of five years and a moratorium period of one year.

However, the ministry has received 282 applications looking for Rs 13,400 crore soft loans. Out of this, 114 applications for a loan amount of Rs 6,000 crore have been approved, according to the sources.

Further, the ministry is also planning to seek a Cabinet approval for the balance 168 applications and sanction an additional soft loan of Rs 7,400 crore.

Adding to it, the subsidy burden would be Rs 1,600 crore for the balance loan amount. Under the scheme, a proposal is being prepared to seek approval for additional soft loan. As well as amend the rules to allow even grain-based distilleries take the benefits.

Currently, molasses-based distilleries are allowed under the scheme. The entry of standard distilleries will help in diversion of more cane during surplus season.

Ethanol extracted from sugarcane will be used for blending in petrol. They will also provide cane farmers a remunerative price for their crop. Ethanol doping in petrol will help the country cut its oil imports.

According to industry body ISMA's forecast, India which is the world's second biggest producer, is likely to produce 31.5 million tonnes (MT) of sugar in 2018-19 marketing year which is slightly lower than 32.5 MT last year.