As India’s second largest agriculture-based financial system, sugarcane stays considered one of India’s most strategic crops, supporting practically 5.5 crore farmers and contributing over ₹1.1 lakh crore yearly to the agricultural financial system. The stagnant Minimal Promoting Worth (MSP) of sugar at ₹31/kg since February 2019, whereas sharp and repeated will increase within the Honest and Remunerative Worth (FRP) and State Suggested Costs (SAP) of sugarcane is pressuring the business in direction of monetary stress.
During the last six years, the FRP of sugarcane has elevated from ₹275 in 2018-19 to ₹355/quintal within the present sugar season (2025-26), a drastic 29 per cent rise together with a number of main sugar-producing states together with Uttar Pradesh, Karnataka, Punjab, Haryana, and Uttarakhand revising State Suggested Worth (SAP) nicely past the FRP within the present season. Because of this, within the present season, the estimated price of sugar manufacturing has elevated to round ₹41.7/kg widening the hole between sugar MSP and price of sugar manufacturing. With MSP remaining stagnant, mills at the moment are promoting sugar nicely beneath manufacturing price, a scenario that’s neither sustainable nor truthful to the business.
Bumper output
With bumper sugar manufacturing estimated within the present season, sugar mills are obliged to function to safeguard farmer livelihoods, keep crushing schedules, and keep away from large-scale crop misery even when circumstances flip unfavourable. The business dealing with the unfavourable scenario with much less diversion to ethanol, lack of worth parity in world market, and falling home sugar costs.
Mills pay round ₹1.25 lakh crore yearly to five.5 crore farmers. This 12 months, because of the increased cane prices, the overall legal responsibility is anticipated to see an addition of ₹20,000–25,000 crore to farmer fee. With sugar costs crashing – ex-mill sugar costs are at round ₹3630–3690 per quintal in Maharashtra and Karnataka, and marginally increased in UP leading to foreseeable losses for mills and constructing cane fee arears in coming month. Present ex-mill costs have already created a ₹6,000+ crore deficit, and if the sugar MSP stays unchanged, cane arrears will start rising sharply from January 2026 onwards, triggering farmer misery and a systemic fee disaster which the business has labored laborious for final 5 years.
Surplus home shares and secure home sugar consumption have deepened the issue. Home sugar consumption has remained stagnant 281 LMT in 2024–25, with mere progress anticipated in upcoming years.
Compounding to the monetary disaster to the mills and halt within the nation’s biofuel revolution is the dearth of readability within the Nation’s Ethanol Mixing Programme past 20 per cent. Within the present season, sugarcane ethanol has solely acquired 28 per cent of complete allocation, main solely about 34 lakh tonnes of sugar diversion to ethanol, leading to a major sugar glut within the home market. Decrease ethanol offtake means underutilised distilleries, weakened money flows, and decreased potential to repay loans, and fee to farmers.
Key for vitality transition too
In a latest research on sugar consumption carried out by the Indian Sugar & Bio-Power Producers Affiliation (ISMA), sugar has extraordinarily low weightage within the CPI basket a rise of sugar MSP at ₹41 would have negligible inflationary impression on the buyer.
Beneath these situations, MSP correction turns into central not solely to the sugar sector but in addition to India’s vitality transition. A dynamic system that adjusts sugar MSP routinely with modifications in cane FRP and SAPs is the necessity of the hour for the sugar business to maintain their operation and guaranteeing well timed fee to farmers.
With out pressing MSP correction and its alignment with elevated FRP/SAPs, the business faces closure of mills in upcoming months, delayed farmer fee, rising farmer arrears, ethanol provide disruptions, and a cascading disaster throughout the agricultural financial system. A good, cost-reflective MSP is important not only for mills however for farmers, vitality safety, and the way forward for India’s built-in sugar-bioenergy ecosystem.
The writer is Director-Basic, Indian Sugar & Bio-Power Producers Affiliation (ISMA)
Printed on December 27, 2025
