Executive Summary:
The Ministry of Cooperation addresses a query regarding the policy framework for prioritizing cooperative societies in ethanol production. The initiative aims to strengthen rural economies, empower farmers, and enhance India's ethanol blending program, energy security, and reduce fossil fuel dependency. To support cooperatives, financial assistance, infrastructure development, and technological support measures are undertaken.
Key Points / Main Content:
Financial Support for Cooperative Sugar Mills (CSMs):
* A one-time grant of ₹1000 crore was provided to the National Cooperative Development Corporation (NCDC) in two installments in FY 2022-23 and FY 2023-24.
* This grant enables NCDC to borrow funds and provide loans of up to ₹10,000 crore to CSMs for setting up ethanol/cogeneration plants or meeting working capital requirements.
Conversion to Multifeedstock Ethanol Plants:
* The Ministry of Cooperation encourages the conversion of molasses-based ethanol plants into multifeedstock plants to ensure year-round distillery operation.
* NCDC will provide financial assistance in a 90:10 ratio, where the society contributes 10% of the project cost, and NCDC provides the remaining 90%, subject to technical viability.
* The Department of Food and Public Distribution (DFPD) is implementing a scheme with a financial outlay of ₹300 crore to provide interest subvention to CSMs converting to multifeedstock units.
Prioritization by Oil Marketing Companies (OMCs):
* Cooperative sugar mills benefiting from DFPD's interest subvention scheme will be given Priority-1 by OMCs to facilitate their transition to multifeed ethanol plants.
National Policy on Biofuels:
* The National Policy on Biofuels 2018, as amended in 2022, advanced the target of 20% ethanol blending in petrol (EBP20) from 2030 to Ethanol Supply Year (ESY) 2025-26.
* Public Sector Oil Marketing Companies (OMCs) would need 1120 crore litres of ethanol to achieve this target.
Impact Analysis:
Sugarcane Farmers (Ganna Kisan):
* Impact: Additional revenue stream and increased economic welfare through ethanol production by cooperative sugar mills.
* Action Required: Engage with cooperative sugar mills to supply sugarcane and benefit from the increased demand.
Cooperative Sugar Mills (CSMs):
* Impact: Increased viability through additional revenue from ethanol production and access to financial assistance for setting up or converting ethanol plants.
* Action Required: Avail financial assistance from NCDC and DFPD, explore conversion to multifeedstock plants, and engage with OMCs for ethanol supply agreements.
Oil Marketing Companies (OMCs):
* Impact: Access to increased ethanol supply from cooperative sugar mills, contributing to the achievement of the EBP20 target.
* Action Required: Prioritize cooperative sugar mills benefiting from DFPD's interest subvention scheme for ethanol procurement.
National Cooperative Development Corporation (NCDC):
* Impact: Enhanced role in providing financial assistance to cooperative sugar mills for ethanol production projects.
* Action Required: Manage and disburse the ₹1000 crore grant, provide loans to CSMs, and assess the technical viability of projects.
Key Entities Referenced
Ministry of Cooperation: A ministry within the Government of India responsible for cooperative societies.
Oil Marketing Companies (OMCs): Public sector oil companies in India that are being directed to prioritize cooperatives for ethanol production.
National Policy on Biofuels 2018: A Government of India policy promoting biofuels, amended in 2022 to advance the target of 20% ethanol blending in petrol.
Ethanol Blending Program (EBP20): India's initiative to blend 20% ethanol with petrol.
National Cooperative Development Corporation (NCDC): An organization providing financial assistance to cooperative sugar mills for setting up ethanol plants.
Cooperative Sugar Mills (CSMs): Cooperative societies involved in sugar production in India, crucial for ethanol production. There are 229 functional Cooperative Sugar Mills across the country.
Department of Food and Public Distribution (DFPD): A department implementing a scheme to provide interest subvention to CSMs for converting their existing sugarcane-based ethanol units into multifeedstock-based ethanol units.
Shri Amit Shah: The Minister of Cooperation answering the question in the Lok Sabha.
GOVERNMENT OF INDIA
MINISTRY OF COOPERATION
LOK SABHA
UNSTARRED QUESTION NO. 3723
TO BE ANSWERED ON 12th 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 multi-feedstock 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.
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