Diversion of surplus sugar to the production of ethanol has led to improved financial conditions of sugar mills, remote and rural areas by attracting investment of more than ₹30,000 crore, according to the government. 

According to the information provided by the Ministry of Consumer Affairs to the Lok Sabha on Wednesday, the diversion of surplus sugar to ethanol production has also helped the mills clear cane dues.

Under ethanol interest subversion scheme, the Government bears interest subvention for five years including one year moratorium against the loan availed by project proponents from banks/ financial institutions at 6 per cent per annum or 50 per cent of the rate of interest charged by bank/ financial institutions — whichever is lower.

“Due to this scheme, ethanol production capacity in the country has increased to 1,380 crore litres which includes 875 crore litres from sugar-based feedstocks and 505 crore litres from grain-based feedstocks. This has led to achievement of 12 per cent blending of ethanol with petrol with production of more than 500 crore litres of ethanol,” the Ministry said. 

“ Rural economy has improved due to this programme as investment of more than ₹30,000 crore has come which has also created thousands of employment opportunities in remote areas,” according to the Ministry.

The government has also claimed that as result of these measures, more than 99.9 per cent of cane dues up to sugar season 2021-22 have been cleared. For the previous sugar season 2022-23, a payment of about ₹1.12-lakh crore has been released to sugarcane farmers thereby clearing 98 per cent cane dues of the farmers. 

Sugar Development Fund

The Centre has provided Sugar Development Fund (SDF) of ₹9,005 crore to sugar mills across the States in the last five years for cane development, modernisation, co-generation and ethanol/ ZLD projects.

Also, financial assistance of more than ₹18,000 has been extended to mills resulting clerance of farmers’ dues during sugar season 2014-15 to 2020-21.  

The scheme for providing financial assistance to the sugar mills has been closed but SDF loan cases where administrative approval had already been issued before the closure were considered.

Sugar Cess

The government informed the Lok Sabha that a sugar cess amounting to ₹12,834 crore was collected up to June 2017. This cess was abolished by the government on introduction of Central Goods and Service Act 2017. By March 2018, ₹10,196 crore was transferred to SDF and was utilised for implementation of various schemes under SDF Act 1982 and SDF Rules, 1983. The balance cess account was transferred to the Consolidated Fund of India.    

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