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Indian sugar industry poised for stability and growth in coming years
Jul-18-2025

The Indian sugar industry is a significant agricultural and industrial sector, ranking as the world's second-largest producer and largest consumer of sugar. It's a major employer, impacting around 50 million sugarcane farmers and hundreds of thousands of mill workers, and contributing substantially to the national economy. The industry plays a crucial role in ethanol production, particularly during surplus sugarcane years, using molasses, a byproduct of sugar production. The industry also produces valuable byproducts like molasses, bagasse, and press mud, which have various applications. The government actively supports the industry through measures like setting Fair and Remunerative Prices (FRP) for sugarcane and promoting ethanol blending. A strong cooperative sector plays a vital role in the industry, particularly in states like Maharashtra.  

The Indian sugar industry is undergoing a transformation as it embraces ethanol production, positioning itself as a key player in the nation’s renewable energy landscape. With the government's push for sustainable fuel alternatives, the blending of ethanol with petrol is gaining momentum, promising to reduce dependence on fossil fuels and enhance energy security. This initiative aims to support the agricultural sector by providing sugarcane farmers with a stable income and addresses environmental concerns by lowering greenhouse gas emissions. As India strives for energy independence, the sugar industry stands at the forefront of this crucial transition. 

Production of sugar

The sugar season usually begins in October and continues until September of the following year. Sugar production in India has reached 247.61 Lakh Metric Tonnes (LMT) as of March 31, 2025, for the ongoing 2024-25 sugar season (SS). For the sugar season 2024-25, Uttar Pradesh was the leading state in sugar production, contributing 87.5 LMT of sugar till March 31, 2025. Additionally, 48 sugar factories were operational in Uttar Pradesh during that period. The highest contribution was due to the improved yield of plant cane and improved cane availability. With six mills still operating, Maharashtra has recorded second highest sugar production of 80.06 LMT in sugar during the season. In Karnataka, out of 80 mills, only two remained operational, contributing 39.55 LMT to the total production to date.  

The Indian Sugar Bio-Energy and Manufacturers Association (ISMA) has significantly reduced its final forecast for sugar production in the sugar year 2024-25, compared to previous projections. The country’s sugar production in 2024-25 marketing year (October to September) is projected at 254.97 LMT. At the start of the sugar crushing season, the ISMA had initially predicted around 280 LMT of sugar production. However, this was later revised downwards due to various factors, including the diversion of sugarcane towards ethanol production.
 

Consumption of sugar

India’s sugar consumption is expected to fall to around 280 LMT in the current 2024-25 sugar season, after touching a record 290 LMT last season. The decline is attributed to subdued demand during the typically high-consumption summer months. India’s sugar consumption has grown at an average annual rate of 1.8% over the past decade, rising from 247.97 LMT in 2015-16 to a peak of 290 LMT last season. The expected dip in the current season marks a pause in that upward trend.    

Exports of sugar 

India exported 4.24 LMT of sugar till April 30, 2025 of the ongoing 2024-25 sugar season. According to the All India Sugar Trade Association (AISTA), Indian mills have exported a total of 4,24,089 tonnes of sugar till April 30 of the current sugar season. Out of which, white sugar exports were at 3.27 lakh tonne, refined sugar 77,603 tonne and raw sugar at 18,514 tonne till April 2025. About 25,000 tonnes of sugar are under loading. Of the total exports undertaken so far, maximum shipments have been to Somalia at 92,758 tonnes, followed by Afghanistan at 66,927 tonnes, Sri Lanka at 60,357 tonnes, and Djibouti at 47,100 tonnes.

For the 2024-25 sugar season, India is expected to export around 8 lakh tonnes of sugar, which is below the 10 lakh tonnes that the government has permitted for export. India was the world’s second-largest sugar exporter during the five years leading up to 2022-23, averaging 6.8 million tons of annual exports. However, the country did not permit exports in the 2023-24 marketing year due to concerns about domestic availability. Export restrictions were eased in January 2025, allowing shipments to resume. While the sugar export allowance offers immediate relief to mills, the increased diversion of sugarcane towards ethanol production marks a long-term shift in the industry. This dual strategy of managing surplus stocks through limited exports and enhancing ethanol production to meet energy goals is poised to redefine India’s sugar sector dynamics in the years ahead.

Sugarcane production

India is the second largest producer of sugarcane in the world, following Brazil. Many countries, especially Brazil and India, are promoting ethanol blending policies to reduce dependence on fossil fuels. This creates a dual market for sugarcane for both sugar and ethanol, enhancing overall profitability and market stability.  

India's sugarcane production for the 2024-25 season is estimated to be around 439.93 million metric tonnes (MMT). This represents a decrease compared to the previous year's 453.16 million tonnes. Several factors, including variations in rainfall and disease incidence, have contributed to production fluctuations across different states. While some states like Uttar Pradesh, Karnataka, and Tamil Nadu are experiencing a decline, others like Maharashtra, Gujarat, and Bihar are seeing an increase in production. 

Fair and remunerative price of sugarcane 

Amid a drop in sugar production during the current season, the government has increased the fair and remunerative price (FRP) of sugarcane by Rs 15 (or 4.41%) to Rs 355 per quintal for the sugar season 2025-26. The new FRP--it is the minimum price mandated by the government that sugar mills are obligated to pay farmers for their produce--will come into effect October 1, 2025. The FRP of Rs 355 per quintal has been approved for a basic recovery rate of 10.25 per cent. Decision will benefit 5 crore sugarcane farmers and their dependents, as well as 5 lakh workers employed in the sugar mills and related ancillary activities. The government has also decided that there will not be any deduction in the case of sugar mills where recovery is below 9.5 per cent. Such farmers will get Rs 329.05 for sugarcane in the ensuing 2025-26 season.

Centre formulates Sugar (Control) Order, 2025 

The government of India has undertaken a comprehensive review of the Sugar (Control) Order, 1966, leading to the formulation of the Sugar (Control) Order, 2025. This revision aims to simplify and streamline the regulatory framework governing the sugar sector in line with current industry dynamics and technological advancements. The Objective of the Sugar (Control) Order, 2025 is a step toward building a more efficient, transparent, and accountable sugar ecosystem, fostering both domestic stability and global competitiveness.

Key highlights of the Sugar (Control) Order, 2025 are:

  • API integration of DFPD portal with sugar mills Enterprise Resource Planning (ERP)/ Systems, Applications, and Products (SAPs): Clause related to information sharing in the digital forms through Application Programming Interface or any other mode with Government Organization has been added. The integration of systems will enhance efficiency; provide real time data, reduce data leakages and redundancies. The process is already going on and more than 450 sugar mills are already integrated with the portal. 
  • Inclusion of clause related to regulation of price of sugar: Currently various provisions related to regulation of price of sugar have been mentioned in the Sugar Price (Control) Order, 2018. Now clause related to Sugar Price (Control) has been incorporated in the sugar control order, hence there will be no separate Sugar Price (Control) Order.
  • Inclusion of raw sugar: The government will meet international standards by adding raw sugar in control order. Raw sugar will be considered in the total stock of sugar across the country; therefore, the figures of actual stock will be available. Currently, raw sugar is being sold by the name of khandsari/Organic; therefore, the change shall put a stop to misleading names of this product.
  • Inclusion of khandsari sugar and khandsari sugar factory: A substantial amount of khandsari sugar is being produced by many such units; therefore, khandsari units having crushing capacity more than 500 TCD has been included in the Sugar Control Order, 2025. Inclusion will ensure payment of FRP to the farmers by Khandsari sugar factories & will help in the accurate estimation of sugar production. A total of 373 No. of khandsari units (with total capacity of about 95000 TCD) are working in the country. Out of which, 66 (with total capacity of about 55200 TCD) are more than 500 TCD.
  • Inclusion of various by-products: Different kinds of by-products namely cane bagasse, cane molasses, press mud cake or any other alternative product including ethanol (produced from cane molasses, sugarcane juice, sugar syrup, sugar) affecting sugar production from sugarcane included in the order. Government will be able to regulate the diversion of sugar to ensure sufficient availability of sugar for domestic consumption.
  • Inclusion of various definitions: Various definitions included in the order namely Sugar, Plantation White Sugar, Refined Sugar, Khandsari Sugar, Gur or Jaggery, Bura Sugar, Cube Sugar, Icing Sugar taken from Food Safety Standard Authority of India (FSSAI), which will ensure the uniformity in definition of various products. 

Recent developments  

NFCSF, IFGE ink pact to promote cane-based bioenergy: The National Federation of Cooperative Sugar Factories (NFCSF) has signed Memorandum of Understanding (MoU) with the Indian Federation of Green Energy (IFGE) to collaborate in promoting sugarcane-based bioenergy and sustainable practices in the country. The collaboration aims to foster innovation, policy advocacy and the adoption of practical green energy solutions, leveraging the strengths of both organisations. As per the terms of the MoU, NFCSF will share its expertise and knowledge related to the use and applications of sugarcane and its downstream by-products for green energy, facilitate access to research publications and reports, and collaborate in joint promotion and policy advocacy efforts. IFGE will actively promote sugarcane-based green energy in India and globally, organise knowledge-sharing events such as workshops and seminars in partnership with NFCSF, and facilitate stakeholder engagement with policymakers and industry leaders. The partnership also enables joint representation before government bodies and provides a platform for coordinated efforts in green energy promotion. Specific cooperative arrangements will be negotiated on a case-by-case basis to suit project requirements. This partnership marks a pivotal step in integrating India's robust sugar industry with its fast-growing green energy ambitions, contributing to a cleaner, more sustainable future for the nation.

Government adds sugarcane on eNAM platform: The government added seven more agricultural products, including sugarcane on the National Agriculture Market (eNAM) platform. The seven commodities include sugarcane, Marcha rice, Katarni rice, Jardalu mango, Shahi litchi, Magahi paan and Banarasi paan. With this, the total number of products on the e-NAM platform has now increased to 238. This will help farmers reach more buyers, earn better prices, and improve the quality of their produce, which will ultimately benefit their income. To support this move, the Directorate of Marketing and Inspection under the Agriculture Ministry has developed clear quality standards for these new products. These standards, available on the e-NAM portal, will guide pricing based on the quality of the produce. The initiative of eNam was launched by the government on April 14, 2016. e-NAM platform promotes better marketing opportunities for the farmers to sell their produce through online competitive and transparent price discovery system and online payment facility. The e-NAM portal provides single window services. This includes commodity arrivals, quality & prices, buy & sell offers and e-payment settlement directly into farmers’ account, among other services. 

Sugar mills owe Rs 15,504 crore to farmers as of March 5: Sugar mills owe Rs 15,504 crore to sugarcane farmers till March 5, 2025 of the current marketing year starting October 2024. To facilitate payment to farmers, the Centre has taken various measures, including fixing the Fair and Remunerative Price of sugarcane. It has allowed the diversion of surplus sugar to ethanol production. The government has allowed the export of 10 lakh tonnes during the current 2024-25 sugar marketing year (October-September) to prevent a fall in ex-mill prices of sugar and accumulation of cane price arrears. It has also fixed the Minimum Selling Price of sugar at Rs 31 per kg. As a result of these measures, a significant reduction has been seen in cane price arrears. Up to sugar seasons 2023-24, more than 99.9% of cane dues have been cleared and in the current Sugar Season 2024-25, more than 80% of cane dues have been cleared as on March 5, 2025. The total outstanding dues of sugarcane farmers stood at Rs 15,504 crore. Of this, Uttar Pradesh sugar millers owe Rs 4,793 crore, followed by Karnataka (Rs 3,365 crore), Maharashtra (Rs 2,949 crore) and Gujarat (Rs 1,454 crore). 

Govt notifies Interest Subvention Scheme for cooperative sugar mills to enhance ethanol production: The government has notified an interest subvention scheme for cooperative sugar mills to support ethanol production. Under the scheme, the government will offer interest subvention on converting existing sugarcane-based ethanol plants into multi-feedstock-based units. This means that ethanol plants, which currently use only sugarcane juice or molasses, will be incentivised to process other raw materials like maize and agricultural residues. The government, as per the scheme, will offer support with interest subvention at 6% per annum or 50% of rate of interest charged by banks/financial institutions, whichever is lower. To ensure the functioning of cooperative sugar mills throughout the year, their existing ethanol plants can be converted into multi-feedstock based plants to use grains like maize and damaged food grains under the new modified scheme. This initiative aligns with the Ethanol Blended Petrol Programme of the central government, which has a target of 20% blending of ethanol with petrol by this year.

Govt permits exports of up to 25,000 tonnes of pharma grade sugar per fiscal under restricted category: The government has allowed the exports of up to 25,000 tonnes of pharma-grade sugar per financial year under the restricted category. The permission will be given only to bona fide pharmaceutical exporters. Pharma-grade sugar is a high-quality product manufactured by following specific standards.  

Outlook

The Indian sugar industry is poised for stability and growth in the coming years, with a combination of strong domestic demand, government support, and strategic initiatives to improve efficiency and explore new avenues for revenue generation like ethanol production. Policies like the FRP for sugarcane farmers and the Minimum Selling Price (MSP) for sugar help ensure a balance between farmer interests and mill profitability. There's a focus on improving the efficiency of sugar mills, including adopting new technologies and optimizing production processes, which will further enhance profitability. The industry is expected to see a rebound in sugar production for the 2025-26 season, following a potential dip in the current season. This recovery is anticipated due to increased sugarcane planting and favorable weather conditions. Favourable weather conditions have resulted in higher cane planting, especially in Maharashtra and Karnataka, giving hope for on time crushing for the 2025-2026 marketing season. In Uttar Pradesh and other northern states, efforts to replace cane varieties are already showing promising results. This is expected to boost yields and recovery rates, contributing to robust sugar production next season. The Ethanol Blending Program is playing a crucial role in reviving the sugar industry by utilizing surplus sugar for ethanol production, reducing reliance on sugar exports, and addressing the issue of excess sugar stocks. The government’s decision to allow the export of 10 lakh tons of sugar for the current season has significantly benefitted the industry. This policy has helped balance domestic sugar stocks while providing financial stability to millers. The timely exports have allowed mills to make prompt cane payments, benefiting 5.5 crore farmers and their families.
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