The Government of India has approved ₹4,687 crore in interest subsidies to support eligible ethanol projects, reinforcing its commitment to expanding the country's biofuel production capacity and accelerating the ethanol blending programme. The financial assistance is aimed at reducing borrowing costs for companies setting up new distilleries or expanding existing ethanol production facilities, making large-scale investments more financially viable.
According to Petroleum and Natural Gas Minister of State Suresh Gopi, who informed Parliament on Monday, the subsidy has been sanctioned under the government's ethanol promotion schemes. Under these initiatives, the government provides interest subvention of 6% or 50% of the interest rate charged by lenders, whichever is lower, for a period of five years. The benefit is available for loans taken to establish new distilleries or enhance ethanol production capacity at existing plants. 
Ethanol projects require significant capital investment in distillation units, storage facilities, and processing infrastructure. By lowering financing costs, the government aims to encourage faster capacity expansion, attract private investment, and improve the financial viability of biofuel projects across the country.
The government also revealed that ₹2,075 crore has already been released to the National Bank for Agriculture and Rural Development (NABARD) since 2022-23. NABARD serves as the nodal agency for disbursing interest subsidy under the scheme, ensuring timely financial support to eligible ethanol producers and monitoring the implementation of approved projects.
The approval comes as India continues to strengthen its Ethanol Blended Petrol (EBP) Programme, which seeks to reduce dependence on imported crude oil, improve energy security, lower carbon emissions, and create additional revenue opportunities for the agricultural sector. Increased ethanol production also provides a stable market for sugarcane, grains, and other feedstocks, supporting farmers while promoting rural industrial development.
During the parliamentary discussion, the minister also stated that half of the proposed 1.75 million tonne strategic petroleum reserve being developed by ONGC at Mangaluru will be reserved for strategic purposes, highlighting the government's parallel focus on strengthening conventional energy security alongside expanding renewable fuel infrastructure.
Industry experts believe the approval of ₹4,687 crore in interest subsidy sends a strong signal that the government remains committed to supporting ethanol capacity expansion through direct financial assistance. The move is expected to improve lender confidence, encourage fresh investments in distilleries, and help India achieve its long-term ethanol blending targets. However, timely project approvals, efficient fund disbursement, and faster commissioning of new facilities will be crucial to translating the approved financial support into additional ethanol production capacity.
