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Home / News / India /  Cabinet approves modified scheme for grain-based ethanol distilleries

The Union Cabinet on Wednesday approved a modified scheme to enhance ethanol distillation capacity in the country, Union Oil Minister Dharmendra Pradhan said.

"Union Cabinet approves modified scheme to enhance ethanol distillation capacity in the country for producing 1st Generation (1G) ethanol from feedstocks such as cereals (rice, wheat, barley, corn & sorghum), sugarcane, sugar beet etc," said Pradhan.

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An interest subvention of 4,573 crore was given a nod for production of ethanol, which can be used for doping in petrol.

Pradhan said that India will need about 1,000 crore litre of ethanol for doping in petrol by 2030 with a view to cut dependency on imports for meeting oil needs. "The nation currently has a capacity of 684 crore litres," he added.

Government has fixed target of 10% blending of fuel-grade ethanol with petrol by 2022 and 20% blending by 2030.

To increase the production of fuel-grade ethanol, the government will also encourage distilleries to produce ethanol from maize and rice available with FCI. Government has fixed remunerative price of ethanol from these produces.

Assistance to farmers

The move is also being seen as a helping hand for the sugar sector and farmers who have been reeling under the pressure of handling excess produce. There has been surplus production of sugar in the country since 2010-11 (except reduction due to drought in sugar season 2016-17). The production is likely to remain in surplus in the country in coming years due to the introduction of improved varieties of sugarcane.

"In normal sugar season (October- September) about 320 Lakh Metric Tonnes (LMT) of sugar is produced whereas, our domestic consumption is about 260 LMT," a statement by ministry of food said.

"This surplus sugar of 60 LMT in normal sugar season put pressure on domestic ex-mill prices of sugar. The excess stocks of 60 LMT which remain unsold also block funds of sugar mills to the tune of about 19,000 crore thereby affecting liquidity positions," the ministry added.

The government has, henceforth, concluded that diversion of excess sugarcane and sugar to ethanol is a correct way forward to deal with surplus stocks.

"Diversion of excess sugar would help in stabilizing the domestic ex-mill sugar prices and will also help sugar mills to get relieved from storage problems," the ministry said.

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