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DoFPD notifies Modified Scheme to Enhance 1G Ethanol Production in India

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Govt notifies modified scheme to produce 1G ethanolDepartment of Food & Public Distribution (DoFPD) has notified a modified scheme to extend financial assistance for producers of “1st Generation” (1G) Ethanol from feed stocks such as Cereals (rice, wheat, barley, corn & sorghum), Sugarcane & Sugar Beet. The Financial Assistance will also be extended to

  • Project proponents for increasing their ethanol distillation capacity
  • For Converting molasses based distilleries to Dual Feedstock for production of Ethanol.

i.The Main Objective behind the scheme is to achieve 20% Blending of ethanol with Fossil Fuels by 2025 from 2030 (previous target was to achieve 20% blending by 2030).

  •   It will help in reducing pollution
  •   Help in Lowering India’s Energy Import dependency
  •   Will lower the Crude oil import bill

ii.As part of the modified scheme

  • Government will bear Interest Subvention for 5 years which includes a 1-year moratorium against the loan availed by the project proponents from banks at 6% per annum or 50% of the rate of Interest charged by banks for capacity addition/new distilleries of distilleries.
  •  It is expected to bring an investment of INR 40, 000 Crore.
  •  Fixed remunerative prices for ethanol derived from various feedstocks.
  • Government is encouraging distilleries to produce ethanol from maize & rice available with the Food Corporation of India.

iii.The benefits of the scheme are

  •  Will facilitate diversion of excess sugar to ethanol
  •  Encourage farmers to diversify their crops, particular to take up maize/corn which need less water compared to sugarcane & rice
  •  To increase the income of farmers and will make sure that farmers get better prices for their crops.

iv.The production of Sugarcane & Ethanol is mainly concentrated in 3 states – Uttar Pradesh, Maharashtra & Karnataka.

  • New Distillers in Different parts of the country will ensure distributed production of ethanol thus saving transportation cost.

v.In order to achieve 20% blending by 2025 & meet requirement of chemical & other sectors India will need 1200 crore litres of alcohol/ethanol.

  • The blending percentage of ethanol with petrol is expected to go up from 1.53% in 2013-14 to 10% in 2022.
  • It is expected that in current ethanol supply year 2020-21, about 325 crore liters ethanol is likely to be supplied to OMCs to achieve 8.5 % blending levels. It is likely that we will be achieving 10% blending target by 2022 with supply of 400 crore liters of ethanol.

Recent Related News:

i.On December 30, 2020 Bhoramdeo Sahakari Sakhar Utpadak Karkhana Maryadit (BSSUKM), a sugar mill signed MoU with NKJ Biofuel Ltd to set up India’s 1st ethanol plant under PPP model at BSSUKM in Kabirdham(Kawardha), Chhattisgarh.

About Ministry of Consumer Affairs, Food & Public Distribution:

DoFPD is a department under the Ministry of Consumer Affairs, Food & Public Distribution
Union Minister – Piyush Goyal
Minister of State – Raosaheb Patil Danve