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The Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi has given its approval for funds amounting to Rs.2,790 crore towards interest subvention for extending indicative loan amount of Rs.12,900 crore by banks to the sugar mills under “Scheme for extending financial assistance to sugar mills for enhancement and augmentation of ethanol production capacity” for the 268 applications/proposals, in addition to Rs.1,332 crore already approved by CCEA in June, 2018.
Welcoming the Cabinet decision, Abinash Verma, Director General, Indian Sugar Mills Association (ISMA) said, “One of the best decisions taken by the Government to allow more sugar mills to avail the benefit of subsidised loans to set up ethanol projects. Along with the earlier approval in September 2018 of loans of over Rs. 6,000 crore, the additional loans of around Rs.15,000 crore could help in creation of another Rs 300-400 crore of ethanol capacities in the country.”
“Considering the current ethanol capacity of 355 crore litres we will cross 10% blending with petrol in the next year itself. The year thereafter could see us substituting even 15% of country’s petrol consumption. This will help the sugar industry reduce surplus sugar production by diverting the surplus sugarcane into ethanol, which could see a reduction of 1.5 to 2 million tonnes of sugar production from next year itself. Overall an excellent decision of the Government whole heartedly welcomed by the sugar producers,” Verma added.
CCEA has also approved Rs.565 crore towards interest subvention for extending indicative loan amount of Rs.2,600 crore by banks to the molasses based standalone distilleries to augment capacity through installation of incineration boilers and other methods in the existing distilleries for achieving zero liquid discharge (ZLD) and additional equipment for ethanol production as well as for setting up of new standalone distilleries for ethanol production. A separate scheme for the molasses based standalone distilleries would be formulated accordingly by Department of Food & Public Distribution.
Both the interest subvention would be payable @6 percent per annum or 50 percent of commercial rate of interest charged by banks, whichever is lower, as per scheme approved by CCEA in June, 2018.
The approval of interest subvention will help in improving liquidity of sugar mills by way of value addition to their revenues from supply of ethanol under Ethanol Blended Petrol Programme (EBP); reducing sugar inventories and thereby facilitate timely clearance of cane price dues of farmers and achieving 10 percent blending target of EBP.