A new year brings new beginnings, new opportunities and also new challenges. I feel the sugar industry is on the high road towards bigger achievements and contributions towards the country, albeit with some roadblocks.
The first biggest issue remains the static sugar MSP. The industry, which has transformed into being the number one producer of green energy, finds itself struggling to generate enough cash flow to keep pace with R&D, investments, technological advancement etc., for scaling up green energy projects like Sustainable Aviation Fuel (SAF) and Compressed Bio Gas (CBG) projects etc.
The sugar industry in 2026 will also need to pay a bigger payout in terms of cane price to the farmers. It’s a higher sugar production year, plus an increased cane Fair and Remunerative Price (FRP) and State Advised Price (SAP). Hence, the industry needs financial liquidity to support the operational expenses, plus invest further to build facilities to support SAF, CBG etc.
Another important concern for the sugar industry is the timely payments to the farmers. The cane arrears in Maharashtra have increased, and this can soon become a bone of contention for other states also.
At ChiniMandi, we have written and discussed at length why the industry wants the sugar MSP to be increased. The industry has voiced its concerns with clarity. As the new year rolls out, the industry expects this crucial reform to take place.
Post the intervention of the Government in 2018, the sugar industry made huge investments in augmenting and building new ethanol distillery facilities. The industry expected that ethanol contribution would be higher from molasses-based ethanol units. However, the new ethanol allocation has reduced the contribution from molasses-based sugar mills considerably. This has left the mills worried.
I feel along with these important policy decisions, the Government should bring important issues to the forefront.
The ethanol producers today find themselves producing excess ethanol, outstripping the demand. This will leave the industry with idling capacity, lower revenue generation, and simply strain the industry financially.
We have achieved a 20% ethanol blending target, far exceeding the original deadline. Now we have to push it further. The country has sufficient ethanol production capacity to meet higher blending targets. The Government should ask Oil Marketing Companies (OMCs), regulatory authorities and OEMs to prepare for shifting to higher blends.
ISMA at its AGM discussed converting sugar mill complexes into ‘energy hubs’. I think it’s a brilliant idea.
Direct dispensation of ethanol will save lots of money for the mills by reducing the transportation cost of ethanol, augmenting cash flows, and also creating rural jobs and infrastructure. The Government should initiate a discussion on this and evaluate various options.
I feel, sooner or later, we will have to come up with concrete and concerted efforts to increase the alternative usage of sugar by diverting ethanol for SAF, IsoButanol etc.
Another area where I feel some spadework should be done is to boost the sugarcane production via superior varieties, which will be high-yielding and can withstand pest attack, weather vagaries, etc.
In an interview with ChiniMandi, R L Tamak, Executive Director & CEO (Sugar Business), DCM Shriram Limited, and President, Uttar Pradesh Sugar Mills Association (UPSMA), said that there is a lot of research going into varietal development. Some good varieties high on sucrose content are being developed by sugarcane breeding institutes. ISMA is working towards improving better varieties.
As the sugar industry looks ahead to the New Year, there is hope that 2026 will bring decisive policy actions and long-awaited reforms. A revision in sugar MSP, timely ethanol price revision, and higher ethanol blending beyond 20% are critical to restoring confidence across the sector. Addressing these challenges can go a long way in strengthening the industry and ensuring that 2026 truly becomes a year that cheers the sector.
For further inquiries or to contact Uppal Shah, Editor-in-Chief, please send an email to Uppal@chinimandi.com.
