The 2023-24 season marked a significant triumph for the Indian sugar industry. The production escalated to an impressive 32.135 million tonnes (mt), exceeding both domestic and international demands, and resulting in a surplus of 8.705 mt. As we look forward to the 2024-25 season, production might experience a slight decline to 29.75 mt, but a surplus is still anticipated, ensuring a steady supply.

In the 2023-24 season, the opening stock was 5.57 mt, and after the production of 32.135 mt and consumption of 29 mt, the carryover stock was 8.705 mt. For the projected 2024-25 season, the opening stock is expected to be 8.705 mt, with a production of 29.75 mt and the same consumption of 29 mt, leading to a carryover stock of more than 9.2 million tonnes.

Despite these achievements, the Indian sugar industry confronts substantial obstacles due to a complicated network of economic and regulatory factors. These issues are likely to influence sugarcane prices for farmers in the forthcoming season.

Principal concerns

Excess sugar and depressed prices: Government limitations on ethanol production and a ban on sugar exports have resulted in a sugar surplus, pushing prices lower.

Escalating production expenses: Rising wages for sugarcane cutters and stagnant minimum support prices (MSP) for sugar are compressing profit margins for mills.

Government regulations: The compulsory jute packaging order is adding to costs and generating uncertainty.

Ethanol difficulties: Recent policy alterations have resulted in unsold ethanol reserves, triggering a financial crisis. The government’s promotion of CHM-based ethanol has flooded the market, causing a price drop for CHM. Export restrictions have further burdened producers with inventories.

The re-election of Prime Minister Narendra Modi’s government has brought renewed hopes and expectations from various sectors, including the sugar, ethanol, bio-CBG, and hydrogen industries. These industries are pivotal to India’s agricultural and energy sectors and are seeking specific policy interventions to drive growth, sustainability, and profitability. Here are the detailed expectations, along with justifications for each demand:

1. Increase in Minimum Support Price (MSP) for Sugar

The sugar industry is pushing for an increase in the MSP from the current ₹31 per kg to at least ₹36-37. This demand arises from the unchanged MSP since 2018, which does not reflect the rising costs of production. The industry cites increased costs in materials, labor, and maintenance as significant challenges


Rising production costs: Since 2018, the cost of essential inputs like sugarcane cost, chemicals (sulfur and lime), packing materials, and maintenance materials has significantly increased. Additionally, higher labor costs and increased interest rates have added to the financial burden on sugar mills.

-Global comparisons: Indian sugar mills operate with some of the highest production costs globally, yet the domestic MSP has not kept pace with these rising costs, making it difficult for mills to stay financially viable.

Farmer payments: An increased MSP would ensure that mills can cover their production costs and make timely payments to sugarcane farmers, thus supporting the livelihoods of millions of farmers and their families.

2. Ethanol Policy Adjustments

The industry is seeking favorable adjustments to the ethanol policy, particularly the use of sugarcane juice (SCJ) and B-heavy molasses (BHM) for ethanol production. This would support the government’s goal of achieving 20% ethanol blending in gasoline by ESY 2024-25.


- Energy security: Ethanol blending helps reduce India’s dependency on imported fossil fuels, enhancing energy security.

- Market stabilisation: Diverting excess sugarcane to ethanol production helps balance the sugar market by preventing oversupply and stabilizing prices.

- Economic benefits: The increased ethanol production can lead to substantial economic benefits for sugar mills, enabling them to invest in new technologies and infrastructure.

3. Allowance for Sugar Exports

The sugar industry is advocating for the relaxation of current export restrictions to prevent domestic oversupply and capitalize on global market opportunities.


- Domestic oversupply: With India’s sugar production consistently high, allowing exports is crucial to prevent oversupply in the domestic market, which can lead to a decline in prices and financial losses for sugar mills.

- Global market opportunities: Relaxing export restrictions would allow India to take advantage of favourable conditions in the global sugar market, potentially boosting revenue for sugar mills.

- Economic stability: Export allowances would help stabilize the domestic market by ensuring that surplus production can be sold internationally, thereby supporting the financial health of the industry.

4. Compliance with Pollution Control Board Regulations

Sugar mills are seeking government support in terms of financial aid and extended deadlines to install the necessary equipment to meet stringent environmental standards.


- High compliance costs: Achieving net-zero emissions requires significant investment in new technologies and infrastructure, which can be financially burdensome for sugar mills.

- Environmental impact: Compliance with pollution control regulations is crucial for reducing the environmental impact of sugar production, contributing to broader sustainability goals.

- Government support: Financial aid and extended deadlines would provide the necessary support for mills to make these investments without compromising their economic stability.

5. Support for Bio-CBG and Hydrogen Production

Bio-CBG (compressed biogas) and hydrogen are emerging as crucial components of India’s renewable energy landscape. The sugar industry is looking for government incentives and support to develop bio-CBG and hydrogen production facilities. Such investments would not only diversify revenue streams but also significantly contribute to reducing the industry’s carbon footprint. This support is seen as essential for the industry’s transition towards more sustainable operations.


- Renewable energy transition: Bio-CBG and hydrogen are key components of India’s renewable energy strategy, helping to reduce dependence on fossil fuels.

- Diversified revenue streams: Investing in bio-CBG and hydrogen production provides sugar mills with additional revenue streams, enhancing their financial stability and sustainability.

- Carbon footprint reduction: These technologies significantly reduce the carbon footprint of sugar mills, contributing to India’s climate goals.

6. Financial assistance for multi-feed ethanol plants

To enhance the resilience and flexibility of ethanol production, the industry is advocating for financial support to convert existing ethanol plants into multi-feed units capable of processing food grains in addition to sugarcane. This conversion would ensure a more adaptable production capacity, allowing the industry to respond better to varying supply and demand conditions. Financial assistance from the government would be critical in facilitating these upgrades.


- Flexibility and resilience: Multi-feed plants offer greater flexibility and resilience in ethanol production, allowing plants to switch between different feedstocks based on availability and market conditions.

- Government targets: Supporting the conversion to multi-feed plants aligns with the government’s ethanol blending targets and ensures a more robust supply chain for ethanol production.

- Economic viability: Financial assistance from the government would make these conversions economically viable, ensuring that ethanol production can continue uninterrupted regardless of sugarcane availability.

7. Enhancing Farmers’ Income

Ensuring fair pricing mechanisms such as aligning the MSP of sugar with the FRP of sugarcane is critical to enhancing farmers’ income. Fair and timely payments help sustain the livelihood of sugarcane farmers and contribute to rural development.


- Fair payments: Aligning the MSP with the FRP ensures that farmers receive a fair price for their produce, which is essential for their financial stability and livelihood.

- Sustainable agriculture: Fair pricing mechanisms encourage farmers to continue cultivating sugarcane, thereby supporting sustainable agricultural practices and ensuring a steady supply of raw materials for sugar production.

Challenges of the industry and expectations

Despite its significant contributions to the economy, the Indian sugar industry faces several challenges that hinder its growth and competitiveness:

1. Low sugarcane yields: Compared to other leading sugar-producing countries, India’s average sugarcane yield is lower due to outdated agricultural practices, inadequate irrigation facilities, and pest infestations.

2. High production costs: High costs of inputs such as fertilizers, pesticides, and labor, coupled with inefficiencies in production processes, exacerbate the financial strain on the industry.

3. Outdated machinery: Many sugar mills operate with outdated machinery, which hampers efficiency and productivity. Modernizing these mills is essential for improving operational efficiency and reducing production costs.

4. Regional disparities: Significant disparities exist in sugarcane cultivation and sugar production across different states. Addressing these disparities is crucial for achieving balanced growth in the industry.

5. Mismatched MSP & FRP: The misalignment between the MSP for sugar and the FRP for sugarcane often leads to profitability issues for both sugar mills and farmers.

6. Lack of Robust Export Mechanisms: The industry faces challenges in accessing international markets due to quality standards, trade barriers, and competition from other sugar-producing countries.

Expectations from the Government

1. Legislative reforms: Implementing legislative changes to align MSP with FRP to ensure fair payments to farmers and improve the viability of sugarcane cultivation and sugar production.

2. Governance reforms: Enhancing efficiency and transparency through strengthened regulatory bodies and accountability mechanisms.

3. Institutional reforms: Improving coordination among stakeholders by establishing a Sugar Board or similar body.

4. Regulatory reforms: Simplifying regulations and reducing bureaucratic hurdles to enhance the competitiveness of the sugar industry.

5. Market reforms: Improving market infrastructure, promoting exports, and facilitating value addition through by-products.


The sugar, ethanol, bio-CBG, and hydrogen industries are at a critical juncture, and the support of the Modi government is pivotal for their future growth and sustainability. By addressing the demands for increased MSP, ethanol policy reforms, export allowances, compliance aid, financial assistance for multi-feed plants, and extended support for net-zero initiatives, the government can ensure these sectors thrive and contribute significantly to India’s economic and environmental goals. The collaborative efforts between the government and industry stakeholders will be crucial in realizing these aspirations.

(The author is Managing Director, Karmayogi Ankushrao Tope Samarth SSK Ltd., Ankushnagar in Jalna district, Maharashtra)