The Central government has approved Rs 4,687 crore in interest subsidy support for ethanol projects to accelerate the expansion of India’s biofuel production capacity and strengthen the country’s ethanol blending programme.
Minister of State for Petroleum and Natural Gas Suresh Gopi informed Parliament that the financial assistance has been sanctioned under the government’s scheme to promote investments in ethanol production. The initiative aims to encourage the establishment of new distilleries and the expansion of existing facilities by reducing the cost of project financing.
Under the scheme, the government provides an interest subvention of 6% or 50% of the interest rate charged by banks and financial institutions, whichever is lower, for a period of five years. The support is intended to make capital-intensive ethanol projects more financially viable by lowering borrowing costs and encouraging private investment in production infrastructure.
The minister also said that Rs 2,075 crore has been released to the National Bank for Agriculture and Rural Development (NABARD) since 2022-23. NABARD serves as the nodal agency for disbursing the subsidy, helping channel financial support to eligible ethanol projects while monitoring fund utilisation.
The move comes as India continues to expand domestic ethanol production to support higher blending levels in petrol, reduce dependence on imported crude oil and strengthen energy security. Increased production capacity is also expected to benefit farmers by creating additional demand for feedstocks such as sugarcane, maize and surplus food grains.
In the same parliamentary update, Gopi said that half of ONGC’s planned 1.75 million-tonne strategic petroleum reserve at Mangaluru will be earmarked for strategic use. The announcement highlights the government’s dual approach of promoting cleaner alternative fuels while maintaining adequate conventional fuel reserves to safeguard the country’s energy security.
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