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Focus: GS-III Environment and Ecology, Science and Technology       


  • Government has taken various measures to improve viability of sugar industry, thereby enabling sugar mills to make timely payment of cane dues of farmers.
  • Going forward, diversion of excess sugarcane and sugar is the long-term solution for addressing the problem of excess stock and improving viability of sugar industry.
  • Ethanol is a green fuel & its blending with petrol also saves the country’s foreign exchange.
  • To encourage sugar mills to divert excess sugarcane to produce ethanol for blending with petrol, the Government has allowed production of ethanol from B-Heavy Molasses, sugarcane juice, sugar syrup and sugar; and has also fixed the remunerative ex-mill price of ethanol derived from these feed-stocks.
  • The State-wise targets for ethanol manufacture have also been fixed. Sugar mills / distilleries have been advised to utilize at least 85 % of their existing installed capacity to produce ethanol.

Why in news?

A meeting co-chaired by Secretary (Food & Public Distribution), Secretary (MoPNG) and Secretary (DFS) was held with the representatives of leading banks and Oil Marketing Companies, Cane Commissioners of major sugar producing States and sugar industry associations, in which ways and means to increase the supply of ethanol to OMCs was discussed to achieve the objective of the Government to increase blending percentage in petrol.


  • It was agreed that as producers of ethanol (sugar mills), buyers of ethanol (OMCs) and the lenders (banks) are willing to enter into a tri-partite agreement (TPA) about producing, buying and paying for the ethanol through an escrow account etc., the banks can consider giving loans to sugar mills even with weak balance sheets.
  • This would facilitate mills to avail loans from banks to set up new distilleries or to expand their existing distilleries, thereby enhancing the overall distillation capacity in the country and thus would help in achieving the blending target under Ethanol Blended with Petrol programme.
  • It was assured by the States and industry that efforts would be made to increase supply of ethanol in the current as well as in ensuing ethanol supply years.
  • In current ethanol supply year 2019-20, efforts are being made to achieve 5.6% blending (compared to 5% in 2018-19).
  • The Government has 10% blending target for mixing ethanol with petrol by 2022 & 20% blending target by 2030.

Click Here to read more about National Policy on Biofuels

November 2023