Sugar mills get 1-month window to get subsidy on loans to set up ethanol distilleries; check deadline

Sugar mills in the country have received a fresh one-month deadline to get subsidy on loan rates to set up new distilleries. The centre has opened the window till October 15 by which sugar mills can submit their proposals to avail loans at a subsidized interest rate for augmenting ethanol capacity, a senior Food Ministry official said on Tuesday, PTI reported. In June 2018, the centre had approved loans for mills so that they can be encouraged to divert sugarcane to ethanol making. The loans can be used to set up new distilleries, upgrade existing ones, or expand capacity.

Why is the government encouraging ethanol production?

India has a sugar glut issue meaning it produces more sugar than required. The government is encouraging sugar mills to divert sugarcane to ethanol making to reduce excess sugar availability in the country. In order to get higher ethanol content, mills have been advised to produce ethanol from B-heavy molasses which has higher sugar. Further, ethanol remuneration is higher than sugar’s, which in turn will ensure better returns to mills.

“So far, 68 proposals worth Rs 3,500 crore have been approved and banks have sanctioned the loan. A new window has been opened now for fresh proposals,” the unidentified Food Ministry official told PTI. Under the scheme, the government has extended twice the interest subvention that comes up to Rs 4,600 crore and the total loan amount comes at Rs 22,000 crore. The new window was opened from September 15 for a month. Under the scheme, those mills whose applications were rejected earlier for non-fulfilment of certain conditions can also apply for soft loans as well as the newly set up mills.

As the government has already received 68 proposals, it is expected that an additional ethanol capacity of 190 crore litres will be created. The government is also mulling on approval of more proposals, the official said.