Government of Bihar, Department of Industries Resolution Ethanol Production Promotion Policy, 2021

Ethanol in Petrol

Government is implementing Ethanol Blended Petrol (EBP) Programme through Oil Marketing Companies (OMCs). At present, Public Sector OMCs are selling upto 10% ethanol blended petrol. Government has notified the National Policy on Biofuels-2018 on 8.6.2018 which indicates a target of 20% blending of ethanol in petrol by 2030. Government has fixed prices for ethanol procurement under EBP Programme.

EBP Programme

The Ethanol Blending Programme (EBP) seeks to achieve blending of Ethanol with motor sprit with a view to reducing pollution, conserve foreign exchange and increase value addition in the sugar industry enabling them to clear cane price arrears of farmers. The Central Government has scaled up blending targets from 5% to 10% under the Ethanol Blending Programme (EBP). The procedure of procurement of ethanol under the EBP has been simplified to streamline the entire ethanol supply chain and remunerative ex-depot price of ethanol has been fixed. To facilitate achieving of new blending targets, a “grid” which networks distilleries to OMC depots and details quantities to be supplied has been worked out. State-wise demand profile has also been projected, keeping in view distances, capacities and other sectorial demands.

National Policy on Biofuels – 2018

The Policy expands the scope of raw material for ethanol production by allowing use of Sugarcane Juice, Sugar containing materials like Sugar Beet, Sweet Sorghum, Starch containing materials like Corn, Cassava, Damaged food grains like wheat, broken rice, Rotten Potatoes, unfit for human consumption for ethanol production.

Bihar & Ethanol

Bihar has been leader in the Sugarcane production in India and is also home to large number of Molasses based Distillery units. Ethanol manufacturing in the State using Sugarcane Juice, Maize and Broken Rice as feed-stock has significant potential for growth.

Objective of Policy

This Ethanol Production Promotion Policy, 2021 is proposed to make Ethanol manufacturing in the State of Bihar more attractive for potential investors. This Policy is aimed towards augmenting the development of Ethanol manufacturing Industries to cut India’s dependence on imports of fossil fuel oils. To ensure sustainable source of income for farmers, entrepreneurs and workers who will be employed in the Ethanol units.

Government of India Initiatives

(i) Government of India, reduced in applicable Goods & Service Tax (GST) from 18% to 5% on ethanol.

(ii) Notification of National Biofuel Policy-2018

(iii) Differential price of ethanol from C heavy molasses, B heavy molasses, sugar, sugar syrup & sugarcane juice

(iv) Amendment to Industries (Development & Regulation) Act, 1951, for free movement of denatured ethanol for Ethanol Blended Petrol (EBP) Programme.

Ethanol source of production

(i) Heavy Molasses,

(ii) Sugarcane Juice, and

(iii) Damaged food grains like wheat, broken rice etc which are unfit for human consumption

(iv) Surplus Rice with Food Corporation of India (FCI) and Maize

(v) all feedstocks permitted under National Policy on Biofuels, 2018

Eligibility for type of Units

Only standalone distilleries (single feed or dual feed) producing 100% fuel-grade Ethanol and are supplying 100% of their Ethanol to Oil Manufacturing Companies (OMCs) under Ethanol Blending Programme (EBP) of Government of India which will be developed as Greenfield project shall be eligible for incentive under this Policy.

The Units will submit either

(i) a copy of Tripartite agreement entered into among the 1Unit, 2their Bankers and 3Oil Marketing Companies (OMCs), or

(ii) Purchase order from Oil Marketing Companies (OMCs) for sourcing of Ethanol manufactured by the Unit

Validity of Policy

This policy shall come into force from the date of its notification i.e. 17th March 2021 and will be applicable till 31st March 2025.The eligible units would be required to submit Stage-1 application latest by 30.06.2021 and application for Financial Clearance on or before 30.06.2022. Incentive under this Policy shall be offered after commencement of commercial production by the Unit

Quantum of Incentives under this policy

The quantum of capital subsidy under this Policy shall be 15% of the Cost of Plant and Machinery or Rs. 5.00 crs, whichever is lower.

Incentive under this Policy to the eligible Units will be in addition to the wide range of benefits eligible under the Bihar Industrial Investment Promotion Policy, 2016. Thus, eligible Ethanol units would be entitled to the following financial assistance:

Sr. No Type of incentive Quantum of incentive Policy
1. Stamp duty and registration fees 100% Exemption of Stamp duty and registration fees
2. Land conversion fees 100% Exemption of Land conversion fees
3. Interest subvention incentive Interest Subvention Incentive at 10% of Term loan for a period of five years, upper limit being 50% of Project Cost, maximum Rs. 20 crs
4. Tax related incentives Tax related incentives (100% SGST reimbursement and 100% Electricity Duty reimbursement) for a period of five years, upper limit being 100% of Project Cost.
5. Employment cost subsidy

50% reimbursement (in case of male workers) and 100% reimbursement (in case of female workers) of expenditure on account of contribution toward ESI and EPF scheme for a period of 5 years for new units for those employees who are domicile of Bihar.

Maximum limit for reimbursement will be Rs.1000/- per month for SC/ST and women employee and Rs. 500/- per month for general employee.

6. Skill development subsidy Skill development subsidy of Rs 20,000 per employee/ Bihar Skill Development Mission (BSDM) rates whichever is lower. This incentive will be applicable for training of employees/ staffs who are domicile of Bihar
7. Capital subsidy Capital subsidy at 15% of the cost of Plant and Machinery, maximum Rs. 5 crs This Policy

Timeline to be followed by Entrepreneurs and Department of Industries

Stage-1 Clearance: Entrepreneurs should submit application for Stage-1 clearance latest by 30th June, 2021 on Single Window Clearance portal ( of Department of Industries. Department of Industries will issue Stage-1 clearance within next seven (07) working days to applications which are complete in all respects.

Land allotment by BIADA: Entrepreneurs should submit application for land allotment on BIADA portal which will be disposed by BIADA within next seven (07) working days

Financial Clearance: Entrepreneurs should submit application for Financial Clearance latest by 30th June, 2022 on Single Window Clearance portal ( of Department of Industries.

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April 2021