In a major reprieve for the sugar industry, the Minimum Selling Price (MSP) of sugar is expected to be increased soon. According to sources, the MSP is likely to be raised to Rs 37.50–38.00 per kg.
The sugar industry has constantly rallied to increase the MSP, which has been stagnant since its last review in 2019, even though the sugarcane FRP was increased multiple times.
In a recent interview with Chinimandi, the Director General of the Indian Sugar and BioEnergy Manufacturers Association (ISMA), Deepak Ballani, said that the MSP for sugar has remained unchanged at Rs. 31/kg since February 2019, while the FRP of sugarcane has increased from Rs. 275 to Rs. 355 per quintal (2025–26) — a rise of 29%.
“However, it may also be noted, as stated above, that SAP states have a weightage of around 35 – 40%, and SAP announced by the state Governments is even higher than the FRP of sugarcane announced by the Central Government. Additionally, the Karnataka cane price is now among the highest, much higher than the FRP of sugarcane. We believe that the MSP of sugar should be adequate enough to at least cover the cost of production of sugar, ” Ballani said.
Prakash Naiknavre, MD of the National Federation of Cooperative Sugar Factories (NFCSF) recently stated that the sugarcane price has been revised four times during the last four years but the sugar MSP has remained stagnant at Rs. 31 per kg creating tremendous financial stress, especially on the Cooperative sugar mills because the Cooperative banks when they provide pledge loan, they take the benchmark of Sugar MSP and not the prevalent sugar prices. This anomaly results in lesser availability of loans to the cooperative sugar mills.
The Government introduced sugar MSP in 2018 at Rs. 29 per kilo to safeguard the interests of the sugarcane farmer. The industry was facing a problem of plenty, with successive years of surplus sugar production and lower sugar offtake.
This resulted in lower sugar prices, and the sugar mills were unable to earn remunerative prices, leading to the accrual of cane arrears to dangerous levels. The Government introduced the MSP to provide a bottom ceiling beyond which sugar prices won’t breach.
The expected decision by the Government to increase the sugar MSP is crucial for the financial well-being of the mills in the current season, as mills are expected to handout a bigger cane price on account of a good sugarcane crop in the current season.
The much-needed policy intervention will help the industry generate sufficient cash flows to pay farmers on time, and cater to other costs, including ramping up investments for future green fuel projects.
In Uttar Pradesh, M-grade sugar was quoted in the range of Rs.3,880–Rs.4,100 per quintal, higher by Rs 10-20 per quintal. Meanwhile, in Maharashtra and Karnataka, S-grade sugar traded at Rs.3,530–Rs.3,650 per quintal.
