The Ministry of Consumer Affairs, Food, and Public Distribution has undertaken a comprehensive review of the Sugar (Control) Order, 1966, leading to the formulation of the Sugar (Control) Order, 2025. These changes aim to modernize the regulatory framework of India’s sugar industry, encompassing aspects from production to by-product management. Here’s a detailed analysis of the key amendments, their merits, demerits, and implications for sugar mills…
1. API Integration of DFPD Portal with Sugar Mills’ ERP Systems –
Merits:
Enhanced Transparency: Real-time data sharing between mills and the Department of Food and Public Distribution (DFPD) ensures accurate monitoring of production and sales.
Streamlined Operations: Automated data submission reduces manual errors and administrative burdens.
Incentivised Compliance: Mills compliant with API integration will continue to receive monthly sugar release quotas, promoting adherence to digital protocols.
Implementation Challenges: Small and medium-sized mills may face difficulties in upgrading their systems to meet API requirements.
Financial Burden: Investing in new ERP systems or upgrading existing ones can be costly for some mills.
2. Inclusion of Sugar Price Control Order, 2018 into Sugar Control Order, 2025 –
Merits:
Unified Regulatory Framework: Consolidating price control measures simplifies compliance and reduces regulatory overlap.
Price Stability: Continued enforcement of Minimum Sale Price (MSP) ensures fair pricing for producers and consumers.
Demerits:
Reduced Flexibility: Rigid price controls may limit mills’ ability to respond to market fluctuations.
Potential Profit Margins Impact: Fixed pricing could affect profitability, especially during periods of increased production costs.
3. Inclusion of Raw Sugar (e.g., Khandsari/Organic) in Sugar Control Order, 2025 –
Merits:
Market Expansion: Allowing domestic sale of raw sugar opens new revenue streams for producers.
Regulatory Uniformity: Standardising definitions and controls across sugar types ensures consistency in quality and compliance.
Demerits:
Operational Adjustments: Mills may need to modify processes to meet new standards and licensing requirements.
Compliance Costs: Adhering to additional regulations may incur extra expenses for producers.
4. Inclusion of Khandsari Sugar & Factories with Capacity 500 TCD –
Merits:
Level Playing Field: Bringing large Khandsari units under regulation ensures fair competition with traditional sugar mills.
Farmer Benefits: Mandating Fair and Remunerative Price (FRP) payments ensures consistent pricing for sugarcane suppliers.
Demerits:
Resistance from Khandsari Sector: Historically unregulated, these units may oppose new compliance requirements.
Implementation Complexity: Monitoring and enforcing regulations across numerous units could strain administrative resources.
5. Inclusion of By-Products (e.g., Bagasse, Molasses, Press Mud, Ethanol) –
Merits:
Comprehensive Oversight: Regulating by-products ensures environmental standards and prevents misuse.
Revenue Recognition: Acknowledging by-products as part of the sugar mill’s revenue stream can improve financial transparency.
Demerits:
Operational Constraints: Additional regulations may limit flexibility in by-product utilization.
Increased Compliance Burden: Mills must navigate complex reporting and licensing for multiple products.
6. Adoption of FSSAI Definitions for Various Sugar Types –
Merits:
Standardisation: Aligning with Food Safety and Standards Authority of India (FSSAI) definitions ensures consistency in product classification.
Quality Assurance: Uniform definitions facilitate better quality control and consumer trust.
Demerits:
Industry Pushback: Some stakeholders argue that existing definitions suffice, and new ones may cause confusion.
Transition Challenges: Updating labeling, marketing, and documentation to reflect new definitions requires time and resources.
Overall Implications for Sugar Mills –
Advantages:
Improved Governance: Enhanced oversight can lead to better industry practices and sustainability.
Market Opportunities: Access to new markets and products can diversify income streams.
Consumer Confidence: Standardisation and quality control boost consumer trust in sugar products.
Challenges:
Adaptation Costs: Upgrading systems, training staff, and modifying operations entail significant investment.
Regulatory Complexity: Navigating the expanded regulatory landscape may require additional administrative efforts.
Potential for Reduced Autonomy: Increased government oversight could limit operational flexibility.
In conclusion, the Sugar Control Order, 2025 represents a significant shift towards a more regulated and standardized sugar industry in India. While the amendments aim to enhance transparency, fairness, and quality, they also introduce new challenges that sugar mills must proactively address to ensure compliance and maintain competitiveness.
P.G. Medhe is the former Managing Director of Shri Chhatrapati Rajaram Sahakari Sakhar Karkhana Ltd and sugar industry analyst. He can be contacted at +91 9822329898.
