Government Scheme for Cooperative Sugar Mills in India

The Government of India introduced a scheme to support Cooperative Sugar Mills (CSMs) through the modified Ethanol Interest Subvention Scheme. This initiative aims to convert existing sugarcane-based ethanol plants into multi-feedstock plants. These plants will be able to utilise grains such as maize and damaged food grains (DFG) for ethanol production. This change is crucial for enhancing the operational efficiency of CSMs.

Background of Cooperative Sugar Mills

Cooperative Sugar Mills play a vital role in India’s sugar industry. They primarily rely on sugarcane for ethanol production. However, the sugarcane crushing season lasts only 4-5 months annually. This limited operational period affects their productivity and financial viability.

Modified Ethanol Interest Subvention Scheme

The modified scheme provides interest subvention at 6% per annum or 50% of the bank’s interest rate, whichever is lower. This support is available for loans extended by banks and financial institutions. The Central Government will bear this cost for five years, which includes a one-year moratorium.

Benefits of Multi-Feedstock Conversion

Converting to multi-feedstock plants allows CSMs to operate year-round. This flexibility ensures that ethanol production can continue even when sugarcane is unavailable. Additionally, it enhances the overall efficiency and productivity of these plants. The financial viability of cooperative ethanol plants is expected to improve .

Ethanol Blended with Petrol Programme

The Government has been promoting the Ethanol Blended with Petrol (EBP) Programme. The goal is to achieve a 20% blending of ethanol with petrol by 2025. This initiative not only supports CSMs but also contributes to reducing the dependency on fossil fuels.

Future Implications

The transition to multi-feedstock plants is expected to have lasting effects on the sugar and ethanol industries. It will provide a sustainable model for ethanol production and enhance the resilience of CSMs. This initiative is part of a broader strategy to improve energy security and promote agricultural diversification.

Questions for UPSC:

1. Critically analyse the impact of the modified Ethanol Interest Subvention Scheme on the financial viability of Cooperative Sugar Mills.
2. What are the benefits of using multi-feedstock for ethanol production? Explain with suitable examples.
3. Comment on the significance of the Ethanol Blended with Petrol Programme in India’s energy policy.
4. What is the role of cooperative societies in the agricultural sector? How do they contribute to rural development?

Answer Hints:

1. Critically analyse the impact of the modified Ethanol Interest Subvention Scheme on the financial viability of Cooperative Sugar Mills.

1. The scheme provides a 6% interest subvention, reducing the financial burden on CSMs.
2. It supports loans for five years, including a one-year moratorium, enhancing cash flow.
3. Conversion to multi-feedstock plants allows year-round operation, improving revenue potential.
4. Increased efficiency and productivity lead to better profitability for CSMs.
5. Overall, the scheme is designed to stabilize and enhance the financial health of CSMs.

2. What are the benefits of using multi-feedstock for ethanol production? Explain with suitable examples.

1. Multi-feedstock plants can utilize maize and damaged food grains, reducing waste.
2. They allow continuous production of ethanol throughout the year, unlike sugarcane-only plants.
3. Increased operational flexibility leads to better resource management and efficiency.
4. Examples include using maize during off-season for sugarcane, ensuring consistent supply.
5. This diversification mitigates risks associated with single crop dependency.

3. Comment on the significance of the Ethanol Blended with Petrol Programme in India’s energy policy.

1. The EBP Programme aims for 20% ethanol blending by 2025, promoting renewable energy sources.
2. It reduces dependency on fossil fuels, enhancing energy security for India.
3. The programme supports agricultural sectors by creating a stable market for ethanol producers.
4. It contributes to environmental sustainability by lowering greenhouse gas emissions.
5. The initiative aligns with global trends towards cleaner energy and climate action.

4. What is the role of cooperative societies in the agricultural sector? How do they contribute to rural development?

1. Cooperative societies empower farmers by providing collective resources and support.
2. They enhance bargaining power, allowing better prices for agricultural products.
3. Cooperatives often provide access to credit, training, and technology for farmers.
4. They contribute to rural development by creating jobs and boosting local economies.
5. Cooperative structures promote social cohesion and community development initiatives.