The Central Government has clarified that it does not directly set up ethanol plants or distilleries anywhere in the country. Instead, entrepreneurs, including cooperative sugar mills, are free to establish such facilities after obtaining the required approvals from the Centre and concerned State or Union Territory governments.
Replying in the Lok Sabha, Minister of State for Consumer Affairs, Food and Public Distribution, Nimuben Jayantibhai Bambhaniya said the government has introduced several ethanol interest subvention schemes between 2018 and 2022 to increase ethanol production capacity and support the Ethanol Blended Petrol Programme.
The schemes aim to encourage sugar mills and distilleries to set up new ethanol plants or expand existing facilities. In 2021, the scope of the scheme was also extended to include ethanol production from grains.
The minister further informed that a dedicated interest subvention scheme for cooperative sugar mills was notified in 2025. The scheme provides a six-month application window for cooperative mills to convert their existing sugarcane-based plants into multi-feed ethanol plants.
Under these schemes, the government facilitates bank loans for project proponents, while providing interest subvention of 6 per cent or 50 per cent of the interest charged by banks or financial institutions, whichever is lower, for five years including a one-year moratorium.