Indian government is mulling an additional soft loan of Rs7,400cr to sugar mills for creating ethanol capacity, as per the media reports.
Earlier during the year, the government had announced a soft loan of Rs4,400cr. It also provided an interest subvention of Rs1,332cr to mills over a period of five years, including a moratorium period of one year under the scheme.
According to media reports, the ministry has received 282 applications seeking Rs13,400cr soft loans, of which, 114 applications for a loan amount of Rs6,000cr has been approved. The subsidy burden is expected to be Rs1,600cr for the balance loan amount.
Currently, molasses-based distilleries are allowed under the scheme. The entry of standard distilleries will help diversion of more cane during surplus season.
The ethanol blending with petrol is likely to double to 8%, in current crop year 2018-19 (October, 2018 to September, 2019), backed by improved prices offered by oil marketing companies. Ethanol extracted from sugarcane will be used for blending in petrol and will provide cane farmers a remunerative price for their crop.
To reduce the dependency of energy demand on crude oil and other oil derivatives, the government has been focusing on increasing ethanol blends with petroleum products.
India, which is the second biggest producer of sugar globally, is likely to produce 31.5mn tonnes of sugar in 2018-19 crop year, slightly lower than 32.5mn tonnes last year, according to ISMA.
The food ministry is also considering tweaking rules to ensure that non-molasses based distilleries are also able to get soft loans. This is under the program launched in June, 2018 for expansion and setting up of new ethanol plants, according to the report.
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Ethanol blending with petrol likely to double at 8% in 2018-19 sugar year