As India races toward its goal of 20% ethanol blending by ESY 2025–26, the government has unleashed unprecedented support for advanced biofuels. The Pradhan Mantri JI-VAN Yojana (Jaiv Indhan–Vatavaran Anukool Fasal Awashesh Nivaran), launched in 2019, provides grants to 2G ethanol projects using non‑food biomass[1]. In late 2025, the scheme was significantly expanded, effectively signalling a “gold rush” for entrepreneurs to enter the 2G ethanol sector. This update expands eligibility and the scope of covered feedstocks, providing capital support and viability gap funding (VGF) to help projects overcome initial investment hurdles.
Understanding the New PM JI-VAN Scheme Updates
The expanded JI-VAN Yojana now extends into FY 2028–29[2], giving investors a longer policy horizon. Key changes include:
– Extended timeline: The amended scheme explicitly “extends [its] timeline for implementation by five years – i.e. till 2028–29”[2]. This long-term outlook helps secure financing and planning for large ethanol facilities.
– Broadened feedstocks: A wider range of lignocellulosic biomass and renewable feedstocks are now eligible. In addition to traditional agri-residues, the scope now explicitly includes agricultural and forestry wastes, industrial by-products, synthesis gas and algae[3]. In practice, this means farmers’ stubble (rice straw, cotton stalks, etc.), corn cobs, sugarcane bagasse, food processing scraps and even urban green waste can be fed into a 2G biorefinery[3]. By recognising these abundant residues, the scheme helps turn pollution‑prone biomass into fuel and income.
– New project types: Importantly, the scheme now permits “bolt-on” and “brownfield” projects[3]. Existing units – such as sugar mills or molasses distilleries – can add 2G ethanol production modules (“bolt-on”) or convert idle capacity (“brownfield”) rather than building entirely new plants. This flexibility lets companies leverage existing infrastructure and speed up the deployment of advanced ethanol facilities.
The expanded feedstock list means materials like rice straw or corn stover can now be processed into ethanol. Using these residues not only provides additional feedstock but also reduces pollution from stubble burning. In effect, turning waste straw into fuel helps clean up the air and boosts domestic ethanol supply.
Beyond these headline changes, the amended scheme gives preference to projects using new technologies or processes, reflecting a push for innovation. In sum, these updates were designed to diversify India’s biofuel base, create farm income for residue collection, and fast-track the 20% blending target under the Ethanol Blending Programme[4]. Investors who move quickly can tap capital grants and subsidies to make their 2G projects viable.
The Path to Viability Gap Funding (VGF)
Viability Gap Funding is at the heart of the JI-VAN scheme – a one-time grant to bridge the funding shortfall of advanced biofuel projects. In government terms, VGF is “a grant… provided to support projects that are economically justified but fall short of financial viability”[5]. In practice, it lets technically-sound 2G ethanol refineries qualify for partial state funding so they can compete with cheaper fossil fuels.
For commercial-scale 2G plants, the assistance is substantial: up to 20% of total project cost or Rs 5 crore per 10 lakh liters of capacity (whichever is lower), subject to a maximum grant of ₹150 crore per project[2]. For example, a biorefinery costing ₹800 Cr with 32 million L/year capacity would receive ₹150 Cr (its 20% cap), whereas a smaller ₹600 Cr, 20 million L project would get ₹100 Cr (20% of cost)[2].
To unlock this VGF, an entrepreneur must follow the scheme’s procedure – overseen by the Centre for High Technology (CHT) and a Scientific Advisory Committee (SAC) under MoPNG[2]. Key steps include:
- Proposal Submission: Project Developers submit a detailed project report (DPR) and funding proposal to CHT, the scheme’s nodal agency[2]. This proposal must outline the technology, project cost, and implementation plan.
- Technical Appraisal: The SAC (an expert panel under the Petroleum Ministry) reviews each proposal. SAC appraises the technology and economics, and recommends only viable projects[2]. (CHT provides secretarial support during this vetting.)
- Offtake Agreement: Before funding is approved, developers must sign an Ethanol Purchase Agreement (EPA) with government Oil Marketing Companies. This EPA guarantees that the OMCs will buy the plant’s 2G ethanol – typically under long-term (up to 15 years) contracts[5]. The mandated offtake is crucial, as it secures revenue and justifies the investment under the blending programme.
- Fund Disbursement: Once a project is approved, VGF is disbursed in stages tied to construction milestones. Typically, 25% of the grant is paid on equipment installation, another 25% on mechanical completion, and the final 50% split between reaching 25% and then 75% of annual production capacity[6]. These phased payments encourage projects to stay on schedule and meet output targets.
By structuring the funding this way, the government ensures that VGF flows only as projects progress, mitigating risk of underperformance. In effect, the scheme combines capital subsidies with revenue guarantees (via the EPA) to make 2G ethanol plants bankable.
Navigating Machinery & Project Execution (The Advance Biofuel Solution)
Building a second-generation ethanol facility is a complex engineering challenge. The process—from biomass handling and pretreatment (e.g. acid hydrolysis or steam explosion) to fermentation, distillation and dehydration—relies on advanced equipment. Moreover, environmental rules (such as achieving ZLD standards) must be met to protect local ecosystems and reduce pollution[3]. All of these technical requirements are prescribed by the scheme, so project design must be aligned carefully to qualify for VGF.
This is where a partner like Advance Biofuel plays a critical role. We specialize in end-to-end 2G ethanol solutions, ensuring your project fits the JI-VAN guidelines and performs efficiently. Key services include:
- Technology and Equipment Vetting: We help clients select and qualify government-approved machinery for every step of the process. This includes robust biomass grinders, steam-reformers for cellulosic pretreatment, high-rate fermenters, and advanced distillation/rectification systems. Importantly, we also ensure proper effluent treatment equipment (e.g. zero-liquid-discharge units) is specified, so the plant meets all environmental norms[3].
- Proprietary Tech Integration: If your project uses patented or cutting-edge conversion technologies (such as specialized enzymes or syngas fermentation), we engineer those into the plant design seamlessly. Our team has experience integrating complex proprietary systems so that throughput and yield targets are met.
- DPR and Proposal Support: We assist in preparing the technical sections of the Detailed Project Report. By clearly outlining the proposed technology, capacity, and equipment layout, we help secure SAC approval and demonstrate scheme compliance. Our detailed engineering inputs make the case for how the project will function and why it qualifies under JI-VAN.
- Project Execution & Commissioning: Advance Biofuel functions as a one-stop EPC (Engineering-Procurement-Construction) provider. From structural and civil works to piping, electrical, and instrumentation, we manage all aspects of construction. We also handle factory acceptance tests and commissioning trials. By coordinating all trades, we minimize execution risk and help projects come online on schedule.
In short, partnering with an experienced EPC firm like Advance Biofuel means your investment aligns with government criteria from day one. With our support in technology selection and execution, you can maximize the likelihood of securing VGF and achieving long-term operational success under the expanded PM JI-VAN scheme.
Conclusion
The expanded PM JI-VAN Yojana is India’s strongest signal yet that the 2G ethanol sector is open for business. By extending the scheme timeline, widening eligible feedstocks, and offering sizable grants (up to 20% of project cost), the government has created a potent incentive for private investment. As the Minister of Petroleum noted, all these measures are aimed at boosting ethanol output to hit the 20% blending target by 2025–26[1]. This funding helps clear the initial capital hurdle; the remaining challenge is purely technical. That is why technical expertise and proper machinery alignment are essential. With its deep experience in biofuel projects, Advance Biofuel enables investors to navigate the VGF process smoothly and build plants that meet the scheme’s exacting standards. Together, robust policy support and engineering excellence will drive India toward cleaner fuels, energy security and the ambitious blending goals ahead[3][1].
Sources: Government press releases and official scheme documents[4][3][5][6][2][1] were used to compile this analysis and ensure the accuracy of scheme details.
[1] Microsoft Word – Approved Reply-RSUQ-1735 for 04-08-2025
https://sansad.in/getFile/annex/268/AU1735_aiguI2.pdf?source=pqars
[2] cht.gov.in
[3] Press Release: Press Information Bureau
https://www.pib.gov.in/PressReleasePage.aspx?PRID=2043925
[4] Press Release: Press Information Bureau
https://www.pib.gov.in/PressReleasePage.aspx?PRID=2197004®=3&lang=2
[5] Pradhan Mantri JI-VAN Yojana
https://www.drishtiias.com/daily-news-analysis/pradhan-mantri-ji-van-yojana
[6] Pradhan Mantri Ji-Van Yojana – IndiaFilings
https://www.indiafilings.com/learn/pradhan-mantri-ji-van-yojana/
