Lok Sabha Question No. 3723 (UNSTARRED), answered on 2025-08-12
Subject: Cooperatives for Ethanol Production
Ministry: COOPERATION
Asked by: Shri Rajesh Verma, Shri Ravindra Dattaram Waikar, Dr. Shrikant Eknath Shinde, Smt. Shambhavi, Shri Naresh Ganpat Mhaske

## GOVERNMENT OF INDIA MINISTRY OF COOPERATION

## LOK SABHA UNSTARRED QUESTION NO. 3723 TO BE ANSWERED ON 12 th  AUGUST 2025

## Cooperatives for Ethanol Production

## 3723 Shri Rajesh Verma:

Shri Ravindra Dattaram Waikar:

Dr. Shrikant Eknath Shinde:

Smt. Shambhavi:

Shri Naresh Ganpat Mhaske

Will the Minister of COOPERATION ( सहकारिता मंत्री ) be pleased to state:

- (a) the details on the policy framework and expected economic benefits for cooperative societies initiative by Oil Marketing Companies (OMCs) to prioritize cooperatives for ethanol production; (b)  whether  this  initiative  is  expected  to  strengthen  rural  economies  and  empower  farmers  by
- providing them with an additional revenue stream, and if so, the details thereof;
- (c) the anticipated impact of this initiative on India's ethanol blending program, energy security, and reduction in fossil fuel dependency; and
- (d)  the  measures  undertaken  to  support  cooperatives  in  enhancing  their  ethanol  production capacity, including financial assistance, infrastructure development, and technological support?

## ANSWER

## THE MINISTER OF COOPERATION सहकारिता मंत्री (SHRI AMIT SHAH)

(a) to (d): Sugar industry is one of the largest agri-based processing industries in India. There are 5 crore sugarcane farmers (Ganna Kisan) and their dependents associated with this industry. Sugar, by its  value  addition  character,  has  made  itself  a  very  powerful  tool  of  economic  and social development in the rural areas of the country. The industry being located in rural areas, is closely associated with the economic welfare of the farmers and related rural population.

There are 229 functional Cooperative Sugar Mills across the country (Source: NCD portal). They collectivelycontribute  around  30%  of  the  total  sugar  produced  in  India.  However,CSMs  faced various financial issues, which,inter alia, included servicing the existing term loans and working capital  loans.Therefore,  in  order  to  increase  their  viability,  it  is  necessary  that  they  generate additional revenue from the production of ethanol, which will increase their profitability.

The National Policy on Biofuels -2018, as amended in 2022, inter-alia advanced the target of 20% blending of Ethanol in petrol (EBP-20) from 2030 to Ethanol Supply Year(ESY) 2025-26. To achieve this target, Public Sector OilMarketing Companies (OMCs) would need 1120 crore litres of ethanol.

In order to enable CSMs to participate in the EBP-20 by way of supplying ethanol to OMCs, the Ministry  of  Cooperation  launched  the  scheme, namely  ' Grant-in-aid  to  National  Cooperative Development  Corporation  (NCDC)  for  strengthening  of  Cooperative  Sugar  Mills  (CSMs)' . Under this scheme one time grant of Rs.1000.00 crore was provided to NCDC in two installment of Rs.500.00 crore each in FY 2022-23 & FY 2023-24 for the purpose of borrowing additional fund from the market for providing loans to the tune of Rs.10,000 crore to CSMs for setting up of  Ethanol  plant/Cogeneration  plant  and  for  meeting  their  working  capital  requirement  or  all three.

While the above scheme aims to provide financial support for setting up new ethanol plants by CSMs,  the  availability  of  raw  material  i.e.,  mollases  and  sugar  syrup  for  the  production  of ethanol is limited by many factors viz, Government Policy on diversion of sugarcane syrup, B heavy  molasses  for  production  of  ethanol  and  duration  of  sugar  cane  crushing  season  and availability of sugarcane depending on rainfall etc. On account of the limiting factors, the CSMs having ethanol plants are not able to operate at their full capacity.

In  order  to  overcome  these  challenges  and  ensure  year-round  operation  of  distilleries,  the Ministry of Cooperation has undertaken an initiative for conversion of existing molasses-based ethanol  plants  into  multi-feedstock  ethanol  plants.The  conversion  of  molasses-based  ethanol plants  to  multifeedstock  ethanol  plants  will  reduce  the  sector's  dependence  on  seasonal sugarcane-based feedstocks and allow greater flexibility in using alternate raw materials such as grains, damaged food grains, and agricultural residues.

In  order  to  enable  the  conversion  of  CSMs  having  ethanol  distilleries  into  multi-feed  ethanol distilleries, the Government is providing the following financial assistance:

- (i) NCDC will provide financial assistance in the ratio of 90:10, wherein the society has to raise only 10% of the project cost and 90% of the project cost will be provided by NCDC, subject to the technical viability of the project.
- (ii) Department  of  Food  and  Public  Distribution  (DFPD)  is  implementing  a  scheme  with  a financial outlay of ₹300 crore to provide interest subvention to CSMs for converting their existing  sugarcane-based  ethanol  units  into  multi-feedstock-based  ethanol  units  (using grains such as maize and rice).
- (iii) Cooperative sugar mills availing the benefit of interest subvention under above scheme of DFPD  will  be  given  Priority-1  by  OMCs  to  facilitate  their  transition  from  single-feed ethanol plants to multi-feed ethanol plants.

The  above  initiativewill  not  only  contribute  to  a  cleaner  fuel  mix  and  reduction  in  carbon emissions  but  also  support  import  substitution  of  petroleum  products,  thereby  improving  the country's  energy  self-reliance.  Furthermore,  it  strengthens  rural  economies  by  enhancing  the economic viability of cooperative sugar mills and providing additional income opportunities for farmers.

*****