The Union government is considering several measures to prevent a domestic surplus of sugar and ensure timely payments to farmers, with a policy announcement expected in January, Food Minister Sanjeev Chopra told reporters on the sidelines of the annual general meeting of the Indian Sugar and Bioenergy Manufacturers Association (Isma).
The government is monitoring the 2025-2026 sugar season where gross production is expected to be achieved 34.3 million tonnes (mt).
“We are actively working and we have to ensure that stockpiling is prevented as much as possible and sugarcane farmers get their payments on time. So we are working on that and you would know in due course the various decisions that the government would take to ensure that there is no stockpiling,” Chopra said.
The decision is likely related to the long-term demand of the sugar industry, including an increase in the minimum selling price (MSP) of sugar to min. ₹41 per kg, increasing the share of ethanol production from sugarcane to 50% from the current 28% and enabling exports beyond the existing 1.5 million tonnes, Chopra said. The sugar season in India runs from October to September and the MSP for sugar has remained unchanged ₹31 per kg from February 2019. The government has allowed the export of 1.5 million tonnes of sugar for the 2025-26 sugar season.
On December 15, the National Federation of Cooperative Sugar Mills Ltd (NFCSF), the apex body representing farmer-owned cooperative sugar mills, urged the government to raise the sugar MSP in view of rising production costs, falling ex-factory sugar prices and increasing financial pressure on sugar mills and sugarcane growers. The federation stressed the need for a review of the MSP regulation on sugar ₹41 per kg, increase in ethanol purchase prices and further diversion 0.5 million tons sugar towards ethanol production.
The average cost of production across India rose to ₹41.66 per kg, according to Isma. Increased MSP is necessary to ensure fair returns to factories and timely payment farmers.
Deepak Ballani, Managing Director, Isma said, “There is enough reason to revise MSP this year. Cane arrears are already piling up. According to reports, cane arrears in Maharashtra as on 30 ₹2000 crores.” He also noted that sugar prices have recently fallen below the cost of production, a situation that calls for immediate action.
Sugar has a low weightage in the CPI basket and revising the MSP for sugar would not put any fiscal burden on the government, said Gautam Goel, former president of Isma. An upward revision of MSP is necessary, he added.
Domestic sugar consumption moderated in the 2024-2025 season to 28.1 million tons from 29 million tons in 2023-24. A recent Isma study on sugar consumption suggests that demand is expected to grow at a CAGR of just 1.5-2.0% over the next five years, reflecting an outlook of relatively low consumption.
Currently institutional or indirect consumption accounts for 60-65% of total demand, with retail households accounting for the remainder. This muted growth is driving factory prices down while straining the sugar industry’s cash flow and financial viability.
