Scheme for Extending Financial Assistance to Sugar Mills for Enhancement and Augmentation of Ethanol Production Capacity (SEFASMEA) 2026: Interest Subvention of 6% per annum
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Quick answer
The Scheme for Extending Financial Assistance to Sugar Mills for Enhancement and Augmentation of Ethanol Production Capacity (SEFASMEA) provides interest subvention on loans to sugar mills, distilleries, and entrepreneurs to boost ethanol production under the Ethanol Blended with Petrol Programme. Eligible applicants receive an interest subvention of 6% per annum or 50% of the charged interest rate, whichever is lower, for five years including a one‑year moratorium. To apply, prepare the application cum proposal as per Annexure‑I, submit it online through the DFPD portal (http://sugarethanol.nic.in/) within the notified window, and follow the subsequent approval and loan disbursement steps.
At a glance
| Main benefit | Interest subvention of 6% per annum or 50% of the interest rate charged by the lending institution, whichever is lower. |
| Ministry / department | Ministry Of Consumer Affairs, Food And Public Distribution |
| Level | Central Government |
| Application mode | Online |
About the scheme
The scheme “Scheme for Extending Financial Assistance to Sugar Mills for Enhancement and Augmentation of Ethanol Production Capacity” implemented by the Department of Food and Public Distribution (DFPD), Government of India, aims to increase ethanol production and supply under the Ethanol Blended with Petrol Programme through providing interest subvention on loans to sugar mills, distilleries, and entrepreneurs. The scheme supports setting up new distilleries, expansion of existing distilleries, conversion to dual feed distilleries, and installation of Molecular Sieve Dehydration (MSDH) columns. Assistance is provided for the production of 1st Generation (1G) ethanol from feedstocks such as cereals, molasses, sugarcane, sugar beet, sorghum, and other approved feedstocks. The scheme also promotes Zero Liquid Discharge (ZLD) systems approved by the Central Pollution Control Board. The scheme helps improve liquidity of sugar mills and enables timely clearance of cane price arrears to farmers.
Benefits
- Interest Subvention: Interest subvention of 6% per annum or 50% of the interest rate charged by the lending institution, whichever is lower.
- Loan Coverage: Assistance is provided on the sanctioned and disbursed loan amount based on the approved project capacity.
- Duration of Assistance: Interest subvention is available for 5 years, including 1 year moratorium period.
- Support for New Distilleries: Financial assistance is available for setting up new grain-based, molasses-based, and dual-feed distilleries.
- Support for Expansion: Assistance is available for the expansion of existing ethanol production capacities.
- Support for Conversion: Assistance is available for the conversion of existing molasses-based or grain-based distilleries into dual-feed distilleries.
- Support for MSDH Installation: Assistance is available for the installation of Molecular Sieve Dehydration (MSDH) columns for ethanol production.
- Support for Zero Liquid Discharge: Assistance is available for the installation of approved Zero Liquid Discharge (ZLD) systems.
Who can apply (eligibility)
- Setting up grain-based distilleries/expansion of existing grain-based distilleries to produce ethanol. However, the benefits of the interest subvention scheme is to be extended to only those distilleries which are using or will be using dry milling technique to produce Dry Distillers Grain Soluble (DDGS).
- Setting up new molasses-based distilleries/expansion of existing distilleries (whether attached to sugar mills or standalone distilleries) to produce ethanol, and for installing any method approved by Central Pollution Control Board for achieving Zero Liquid Discharge (ZLD).
- To set up new dual feed distilleries or to expand existing capacities of dual feed distilleries.
- To convert existing molasses based distilleries (whether attached to sugar mills or standalone distilleries) to dual feed (molasses and grain/ or any other feed stock producing 1G Ethanol); and also to convert grain based distilleries to dual feed.
- To set up new distilleries/expansion of existing distilleries to produce ethanol from other feed stocks producing 1G ethanol such as sugar beet, sorghum, cereals, etc.
- To install the Molecular Sieve Dehydration (MSDH) column to convert rectified spirit to ethanol in the existing distilleries.
Documents required
- Application Cum Proposal Form
- Detailed Project Report
- Loan Sanction Letter
- Loan Disbursement Documents
- Land Documents For Project Site
- Environmental Clearance Application Documents
- Zero Liquid Discharge Compliance Certificate
- Certificate Verified By Central Pollution Control Board
- Certificate Verified By Excise Commissioner
- Chartered Engineer Certificate
- Utilization Certificate
- Progress Reports Uploaded On DFPD Portal
- Ethanol Supply Agreement With Oil Marketing Companies (if applicable)
- Proof Of Clearance Of Sugar Development Fund Dues (if applicable)
How to apply
- 1The applicant must prepare the application cum proposal in the prescribed format (Annexure-I).
- 2The applicant must submit the application online through the DFPD portal.
- 3The applicant must submit the application within the notified application window announced by DFPD.
- 4The Screening Committee and Approval Committee scrutinize the applications.
- 5Eligible applicants receive in-principle approval from DFPD.
- 6The approved proposal is forwarded to banks or financial institutions for loan sanction.
- 7The applicant must obtain loan disbursement within 1 year from the date of approval.
- 8The applicant must complete the project within the prescribed timeline and submit the required certificates.
Frequently asked questions
What is the objective of this scheme?+
The scheme aims to increase ethanol production capacity and improve liquidity of sugar mills through financial assistance in the form of interest subvention on loans.
Who implements this scheme?+
The scheme is implemented by the Department of Food and Public Distribution, Government of India.
Who can apply under this scheme?+
Sugar mills, distilleries, and eligible entrepreneurs can apply under the scheme.
What type of projects are supported under the scheme?+
The scheme supports setting up new distilleries, expansion of existing distilleries, conversion into dual feed distilleries, and installation of MSDH columns.
What is the rate of interest subvention provided?+
Interest subvention of 6% per annum or 50% of the applicable interest rate, whichever is lower, is provided.
For how long is the interest subvention available?+
The interest subvention is available for 5 years including 1 year moratorium period.
Which feedstocks are eligible for ethanol production under the scheme?+
Feedstocks such as cereals, molasses, sugarcane, sugar beet, sorghum, and other approved materials are eligible.
Is there any condition regarding ethanol supply?+
The beneficiary must supply at least 75% of ethanol produced from the additional capacity to Oil Marketing Companies for blending with petrol.
Are grain based distilleries eligible for assistance?+
Yes, grain-based distilleries are eligible if they use or propose to use dry milling technique for DDGS production.
Is Zero Liquid Discharge mandatory for molasses based distilleries?+
Yes, molasses based distilleries must install an approved Zero Liquid Discharge system.
Where can applicants submit the application?+
Applicants can submit the application online through the DFPD portal notified under the scheme.
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