Centre's Scheme for Cooperative Sugar Mills
The government has introduced a new scheme aimed at improving the economic viability of cooperative sugar mills, particularly focusing on boosting ethanol production by converting existing distilleries.
Scheme Details
- The scheme allows cooperative sugar mills to access subsidised loans for converting sugarcane-based ethanol distilleries into dual-feed units.
- Nearly 63 cooperative sugar mills with distilleries are expected to benefit.
- Previously, the interest subvention scheme for converting distilleries was only available to private sugar companies.
Financial Aspects
- Eligible cooperative sugar mills will receive a 50% interest subvention on project loans or a 6% rate — whichever is lower.
- This benefit is available for five years, including a one-year moratorium.
- Currently, loans are predominantly secured through the National Cooperative Development Corporation (NCDC), which charges about 8.5% interest.
- With the subvention, the effective interest rate for borrowers would be approximately 4.25%.
Expected Outcomes
- The scheme is projected to enhance ethanol production by enabling the use of grains and corn, along with molasses.
- Cooperative sugar mills can extend their operation period by 2-3 months beyond the typical 4-5 month molasses supply window.
- The initiative is seen as economically beneficial, with a loan interest rate of 4.25% considered "excellent" for investments.
