The Union government has approved ₹4,687 crore in interest subsidies for eligible ethanol projects under various support schemes aimed at expanding domestic ethanol production, as per news reports.
The financial assistance is intended to accelerate investments in biofuel infrastructure, reduce dependence on crude oil imports, and support the country's ethanol blending programme.
Replying to a question in the Rajya Sabha, Minister of State for Petroleum and Natural Gas Suresh Gopi said the approved interest subsidy covers eligible ethanol projects across the country.
He added that the government has already released ₹2,075 crore to the National Bank for Agriculture and Rural Development (Nabard) since 2022-23, with Nabard serving as the nodal agency for disbursing the subsidy.
Under the scheme, eligible projects receive an interest subvention of 6% per annum or 50% of the interest charged by banks and financial institutions, whichever is lower, for a period of 5 years.
The benefit applies to term loans taken for establishing new distilleries or expanding ethanol production capacity at existing facilities and also includes a one-year moratorium on loan repayment.
The scheme covers molasses-based, grain-based, and dual-feed distilleries, along with projects aimed at increasing ethanol manufacturing capacity.
Apart from the interest subsidy, the government has introduced several measures to promote ethanol production.
Under the PM JI-VAN Yojana, financial assistance and viability gap funding are provided for second-generation (2G) bioethanol projects that use agricultural residues and biomass as feedstock.
The Centre has also launched a separate interest subvention scheme to help cooperative sugar mills convert single-feedstock distilleries into multi-feedstock facilities capable of processing maize and damaged foodgrains in addition to sugarcane.
Ethanol supplied under the Ethanol Blended Petrol (EBP) programme also attracts a concessional 5% GST, while public sector oil marketing companies provide long-term procurement agreements to improve demand certainty.
Separately, the minister informed Parliament that half of ONGC's 1.75-million-tonne petroleum storage facility at Mangaluru will be reserved for India's Strategic Petroleum Reserve (SPR), while the remaining capacity will be used for commercial operations.
He added that India currently has 5.33 million tonnes of strategic crude oil storage capacity across Visakhapatnam, Mangaluru and Padur.
Including refinery storage, terminals, pipelines, and other facilities, the country's total petroleum storage infrastructure is sufficient to meet approximately 74 days of net crude oil import requirements.
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The government's approval of ₹4,687 crore in interest subsidies is expected to support fresh investments in ethanol production capacity and strengthen India's biofuel ecosystem. Alongside incentives for second-generation ethanol and strategic petroleum storage expansion, the measures form part of the country's broader efforts to improve energy security and reduce reliance on imported fossil fuels.
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Published on: Aug 5, 2026, 1:04 PM IST
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