SUBJECT:

• GS-3: Economy (Biofuels, Agricultural Productivity)
• GS-2: Government Policies (Energy Security, Cooperative Sector Reforms)

Key Highlights

Overview of the Scheme

• The Government of India introduced the Modified Ethanol Interest Subvention Scheme to improve the financial viability of Cooperative Sugar Mills (CSMs).
• Allows CSMs to upgrade their ethanol plants to use multiple feedstocks like maize and damaged food grains (DFG) alongside sugarcane.
• Aims to ensure year-round production and reduce reliance on seasonal sugarcane availability.

Ethanol Production in India

• Ethanol production in India primarily depends on sugarcane, which has a limited crushing season of 4-5 months per year.
• Government’s diversification efforts aim to maintain continuous ethanol supply.
• The Ethanol Blended Petrol (EBP) Programme targets 20% ethanol blending with petrol by 2025.

Key Features of the Modified Scheme

• Interest Subvention:
  • 6% per annum or 50% of the bank interest rate, whichever is lower.
  • Loan tenure: Five years, with a one-year moratorium.
• Encourages investment in ethanol production by making loans more affordable for CSMs.

Advantages of Multi-Feedstock Conversion

• Ensures Year-Round Production: Reduces dependency on sugarcane’s seasonal availability.
• Enhances Financial Viability: Diversified raw materials help maintain consistent revenue flow.
• Utilizes Agricultural Waste: Promotes efficient resource use by processing damaged food grains and other residues.

Impact on Ethanol Blending Targets

• The EBP Programme reached 19.6% ethanol blending as of February 2025, moving closer to the 20% target.
• Increased ethanol availability will help India reduce crude oil imports and enhance energy security.

Future Prospects for Cooperative Sugar Mills

• Improved sustainability through feedstock diversification.
• Reduces dependence on sugarcane, benefiting both farmers and ethanol producers.
• Strengthens India’s agricultural economy by creating a stable demand for multiple crops.

Mains Mock Question

“Discuss the significance of the Modified Ethanol Interest Subvention Scheme in achieving India’s ethanol blending targets. How does multi-feedstock ethanol production impact the agricultural and energy sectors?”