Start a Business in Ethanol Industry

Ethanol is an agro-based substance made mostly from molasses, a by-product of the sugar industry. When there is a glut of sugarcane and prices are low, the sugar business is unable to pay farmers their cane prices on time. The Ethanol Blending Program (EBP) aims to produce ethanol-motor spirit blends in order to reduce pollution, conserve foreign exchange, and boost value addition in the sugar business, allowing farmers to clear cane price arrears. The Department of Food and Public Distribution (DoFPD) has stated that it will provide financial assistance to project developers to help them expand their ethanol distillation capacity. The action is in keeping with the country’s goal of achieving 20% crude oil blending by 2025 and increasing ethanol production capacity.

Set up distilleries to manufacture 1st Generation (1G) ethanol from cereals (rice, wheat, barley, corn, and sorghum), sugarcane, and sugar beet would receive financial aid.

Conversion of molasses-based distilleries to dual feedstock distilleries will also be supported. Under the proposal, the government would cover interest for five years, including a one-year embargo on project proponents’ ability to borrow money from banks at a rate of 6% per year or 50% of interest, whichever is lower. The new programme is projected to attract investments of around $400 billion ($5.47 billion). In rural India, the potential investment in capacity expansion and new distilleries will result in a slew of new job possibilities. There are enough feedstocks available for ethanol production, and the government has set fair prices. Ethanol buyers have been secured for oil marketing businesses.

The scheme would make it easier for farmers to divert excess sugar to ethanol and encourage them to switch from sugarcane and rice to maize and corn, which require less water.

The government hopes that the scheme will lessen India’s reliance on crude oil imports. To promote the agricultural economy, reduce reliance on imported fossil fuels, save foreign cash on crude oil imports, and reduce air pollution, the government has set a goal of mixing 10% fuel-grade ethanol with petrol by 2022 and 20% by 2030. The government is also encouraging distilleries to expand fuel-grade ethanol production by using maize and rice available from the Food Corporation of India. Approximately 3.25 billion litres of ethanol are scheduled to be provided to oil firms in the current supply year (2020-21) to achieve 8.5 percent blending levels.