Cabinet approves National Biofuel Policy to cut crude oil import

The Union cabinet on Wednesday approved a national biofuel policy which seeks to enhance ethanol production and reduce crude oil import price by Rs 4,000 crore this year.

The policy expands the sources of raw materials for ethanol production by allowing the use of sugarcane juice, sugar beet, sweet sorghum, starch-containing materials like corn, cassava, damaged food grains like wheat, broken rice, rotten potatoes which are unfit for human consumption for ethanol production.

"Farmers are at a risk of not getting appropriate price for their produce during the surplus production phase. Taking this into account, the policy allows the use of surplus food grains for production of ethanol for blending with petrol with the approval of National Biofuel Coordination Committee,” an official statement said after the cabinet meeting.

“One crore litre of ethanol saves Rs 28 crore of forex at current rates. The year 2017-18 is likely to see a supply of around 150 crore litres of ethanol which will result in savings of over Rs 4,000 crore of forex,” Law and IT Minister Ravi Shankar Prasad said briefing reporters.

He said it will also have potential health and environmental benefits.