Centre Clears Massive Financial Support For Ethanol Projects
The Central Government has approved ₹4,687 crore in interest subsidies for eligible ethanol projects to accelerate investments in ethanol production capacity and strengthen India’s biofuel ecosystem.
The announcement was made in Parliament by Minister of State for Petroleum and Natural Gas Suresh Gopi, who said the financial assistance is aimed at expanding ethanol production, supporting the Ethanol Blended Petrol (EBP) programme, and reducing India’s dependence on imported crude oil.
₹2,075 Crore Already Released Through Nabard
The government informed Parliament that ₹2,075 crore has already been released to the National Bank for Agriculture and Rural Development (Nabard) since 2022-23. Nabard serves as the nodal agency responsible for disbursing the interest subsidy to eligible projects.
The financial support is expected to encourage new investments while helping existing ethanol producers expand their production capacity.
Interest Subsidy Available For Five Years
Under the scheme, eligible projects will receive an interest subvention of 6% per annum or 50% of the interest charged by banks and financial institutions, whichever is lower, for a period of five years.
The benefit applies to term loans taken for setting up new distilleries or expanding ethanol production at existing facilities. It also includes a one-year moratorium on loan repayment.
The scheme covers molasses-based, grain-based, and dual-feed distilleries, along with projects aimed at increasing ethanol manufacturing capacity.
Additional Incentives For Biofuel Projects
Apart from the interest subsidy, the government is also supporting ethanol production through the PM JI-VAN Yojana, which provides financial assistance and viability gap funding for second-generation (2G) bioethanol projects using agricultural residue and biomass.
In addition, cooperative sugar mills are being supported to convert single-feedstock distilleries into multi-feedstock facilities capable of processing maize, damaged foodgrains, and sugarcane. Ethanol supplied under the EBP programme also attracts a concessional 5% GST, while oil marketing companies provide long-term procurement agreements to producers.
Strengthening India’s Energy Security
The latest financial package is expected to accelerate ethanol capacity creation, improve energy security, and support the government’s clean fuel strategy. By encouraging domestic ethanol production, the initiative aims to reduce crude oil imports, strengthen the biofuel sector, and move India closer to its long-term ethanol blending targets.
Summary
The Central Government has approved ₹4,687 crore in interest subsidies for ethanol projects to boost domestic production and support the Ethanol Blended Petrol programme. Eligible projects will receive interest support of 6% or 50% of bank interest for five years, while ₹2,075 crore has already been released to Nabard since 2022-23. The initiative is expected to strengthen India’s biofuel infrastructure and reduce dependence on imported crude oil.
