GOI notifies financial scheme to enhance ethanol distillation capacity for 1G ethanol


In a notification issued on the 14th day of January 2021 the Central Government notified a 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.

The scheme is available for entrepreneurs for
– Setting up grain based distilleries / expansion of existing grain based distilleries
– Setting up new molasses based distilleries/ expansion of existing distilleries
– To set up new dual feed distilleries or to expand existing capacities of dual feed distilleries
– To convert existing molasses based distilleries to dual feed and also to convert grain based distilleries to dual feed.

The assistance under the scheme would be interest subvention @ 6% annum or 50% of rate of interest charged by banks/National Cooperative Development Corporation (NCDC) / Indian Renewable Energy Development Agency Limited (IREDA) / Non Banking Financial Companies or any other financial institutions which are eligible for finance from NABARD shall be borne by the Central Government for five years including one year. Interest subvention would be available to only those distilleries which will supply at least 75% of ethanol produced from the added distillation capacity to OMCs for blending with petrol.

Click here to read the notification

With a view to increase production of ethanol and its supply under Ethanol Blended with Petrol (EBP) Programme, especially in the surplus season and thereby to improve the liquidity position of sugar mills enabling them to clear cane price arrears of the farmers the Government of India notified the scheme for extending financial assistance to sugar mills for enhancement and augmentation of ethanol production capacity. Thereafter schemes for extending financial assistance to sugar mills and molasses based standalone distilleries for enhancement and augmentation of ethanol production capacity. The Government has also opened a small window of 30 days for inviting applications under the scheme from molasses based stand alone distilleries and from sugar mills.


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