The Ministry of Consumption, Food and Public Distribution noted in a final update that in the coming years, with 20% ethanol mixed with gasoline, the government will be able to reduce imports of crude oil, a step towards Atma Nirbhar in the oil sector and this will also help to increase the incomes of farmers and create additional jobs in the distilleries. During a normal sugar season, about 320 LMT of sugar are produced against a domestic consumption of 260 LMT. This 60 LMT of excess sugar which remains unsold, freezes the funds of the sugar factories to the tune of approximately Rs. 19,000 crore each year thus affecting the liquidity positions of the sugar factories, causing an accumulation of arrears in the price of sugar cane of the farmers. To cope with the sugar surplus, the sugar factories are encouraged by the government to export sugar, for which the government has granted financial assistance.
However, India being a developing country can export sugar by providing financial assistance for marketing and transportation only until 2023, in accordance with WTO agreements. Thus, as a long-term solution to deal with surplus sugar, to improve the sustainability of the sugar industry and to ensure the timely payment of cane dues to farmers, the government has encouraged the diversion of the surplus. of sugarcane and sugar in ethanol to supply petroleum marketing companies for blending. with gasoline that would not only reduce the dependence of imports on crude oil, promote ethanol as a native and non-polluting fuel, but also increase the incomes of sugar cane producers.
Previously, the government set a target of 10% blending fuel grade ethanol with gasoline by 2022 and 20% blending by 2030, but now the government is preparing a plan to prepare for the achievement of the 20% blend target. However, as the existing ethanol distillation capacity in the country is not sufficient to produce ethanol to meet blending targets, the government is encouraging sugar factories, distilleries and entrepreneurs to establish new distilleries and extend their existing distillation capacities and also extend financial assistance as an interest subsidy for 5 years at a maximum interest rate of 6% against loans granted by sugar factories / distilleries to banks for setting up their projects.
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