The Centre Thursday announced an additional soft loan of Rs 12,900 crore for sugar mills to create ethanol capacity under a recently launched scheme.
In addition, the government said a separate soft loan of Rs 2,600 crore will be provided to molasses-based standalone distilleries to augment capacity and set up new units.
A decision in this regard was taken at the Cabinet Committee on Economic Affairs (CCEA) meeting, chaired by Prime Minister Narendra Modi.
A soft loan is a loan given at a subsidised interest rate.
In June 2018, the government had announced a soft loan of Rs 4,400 crore and provided an interest subvention of Rs 1,332 crore to mills over a period of five years, including a moratorium period of one year to augment ethanol output.
So far, the food ministry has approved 114 applications for a loan amount of Rs 6,000 crore although applications received were for over Rs 13,400 crore worth of soft loans.
"To augment ethanol capacity, the government has approved additional funds. These additional funds will be in two categories -- Rs 2,790 crore and Rs 565 crore," Finance Minister Arun Jaitley told reporters after the Cabinet meeting.
The additional funds are part of the government's measure to address the stress in the sugar sector, he said, adding that "they (mills) have some stress and outsanding dues. The government is trying to augment the income of mills."