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Diversion of excess sugar to ethanol to enhance income of sugarcane farmers and to achieve ethanol blending target

21st November, 2020 Environment

Context: To deal with surplus stocks of sugar, sugar-mills are being encouraged by the Government to export sugar, for which Government has been extending financial assistance.

  • India being a developing country can export sugar by extending financial assistance for marketing and transport only up to year 2023 as per WTO arrangements.

Ethanol blending

Government has been encouraging diversion of excess sugarcane & sugar to ethanol for supplying to Oil Marketing Companies for blending with petrol as a

  • Long term solution to deal with surplus sugar
  • To improve sustainability of sugar industry
  • To ensure timely payment of cane dues to farmers
  • To reduce import dependency on crude oil
  • Promote ethanol as a fuel which is indigenous & non polluting
  • Enhance income of sugarcane farmers.

Earlier, the Government had fixed a target of 10% blending of fuel grade ethanol with petrol by 2022 and 20% blending by 2030 but now Government is preparing a plan to prepone achievement of  20% blending target.

  • Existing ethanol distillation capacity in the country is not sufficient to produce ethanol to achieve blending targets.
  • Government is encouraging sugar mills, distilleries and entrepreneurs to set up new distilleries and to expand their existing distillation capacities and is also extending financial assistance by way of interest subvention for 5 years at 6% maximum rate of interest against the loans availed by sugar mills/ distilleries from banks for setting up their projects.
  • Government is also encouraging distilleries to produce ethanol from other feed stocks like grains, etc for which the present distillation capacity is not sufficient. With use of other feedstocks, ethanol can be produced in non-sugarcane states also and this will help in distributed ethanol production in the country.