Six decades later, a sweeter deal may be on its way for Indian sugarcane farmers

The government is reviewing a law to modernize and simplify outdated regulations governing the world’s second-largest sugar producer, and if the Centre goes ahead with plans to revise the Sugarcane (Control) Order, 1966, income of sugarcane farmers could rise.

The 1966 order was framed when sugar was the only major output from cane, but does not take into account the fact that the industry has since diversified. Today, sugar mills also produce ethanol, electricity, molasses, bagasse, and bio-CNG, two government officials said on the condition of anonymity.

Yet, the existing rules continue to link the fair and remunerative price (FRP)—the minimum price that sugar mills in India need to pay sugarcane farmers—for cane only to sugar prices, leaving little scope for farmers to benefit from these additional revenue streams.

Pricing overhaul

Under the proposed draft, which Mint has seen, the FRP for cane would be tied to the total revenue from all cane-based products, and not just sugar. The new order also provides for quicker payment of dues to farmers—within 14 days of cane purchase.

The Sugarcane (Control) Order empowers the Centre to fix cane prices, regulate sugar production, and oversee the sale and movement of sugar. Though the order has been amended periodically, most changes have been piecemeal. For consumers, a more efficient regulatory structure could help stabilize retail sugar prices and reduce volatility, while also making India’s sugar industry more competitive in the global market, the officials said. There are around 703 sugar mills in India, split into 325 cooperative, 335 private mills, and 43 public sector factories.

The proposed Sugarcane (Control) Order will simplify definitions and bring clarity to key provisions, which will have a bearing on the ₹1.3-trillion sugar industry. It will also review the 15-km minimum distance rule between two sugar factories, which was introduced to avoid competition as mills then were few and small, but is now seen as outdated and restrictive. This means that more mills could be set up near existing factories, especially in regions where sugarcane is readily available. The government is planning to remove this requirement to allow mills to compete freely for sugarcane, said the first of the two officials cited earlier.

Political impact

The development assumes political significance and will impact major sugarcane growing states of Uttar Pradesh (80 Lok Sabha seats), Maharashtra (48 Lok Sabha seats), and Karnataka (28 Lok Sabha seats), that together account for nearly a third of the total 545-member lower house of parliament.

“The intention behind the amendment to the Sugarcane (Control) Order, 1966, is to extend the ambit of government control to the cottage industry segment of sugar, which includes production units of gur, khandsari, and raw sugar. At present, the share of khandsari units in sugarcane consumption is around 31% of total sugarcane production. Khandsari units cannot compete with sugar mills because of differences in efficiency and diversity of products," said Sudhir Panwar, farm expert and former member of the Uttar Pradesh Planning Commission.

Queries emailed to the Centre's department of food and public distribution remained unanswered till press time. The Indian Sugar & Bio-Energy Manufacturers Association (ISMA) said it would respond once the draft of the new order is released.

Farmers have also been demanding that FRP be linked to sugar recovery and market price of sugar and by-products like ethanol and molasses. FRP and SAP (state advised price) are two different concepts in the context of sugarcane pricing, with FRP being the minimum price fixed by the central government, and SAP being a higher, state-recommended price for sugarcane in certain producing states such as Uttar Pradesh, Punjab and Haryana.

“We hope that the government will safeguard farmers’ interests while drafting the Sugarcane (Control) Order, 1966. At present, the price of sugarcane does not reflect the rising input costs. We want a clear and uniform formula for cane pricing that takes into account increases in fertilizer, labour, electricity, and diesel costs," said Ranbir Singh, a sugarcane farmer and president of the Saharanpur-based Kisan Nyay Morcha.

The fair and remunerative price for sugarcane for the 2025-26 sugar season has been fixed at ₹355 per quintal by the central government for a basic recovery rate of 10.25%. This is a 4.41% increase from the previous season, and will be applicable for purchases starting 1 October, 2025. For recovery rates below 9.5%, there will be no deduction, and the price will be ₹329.05 per quintal.

For the 2025-26 crushing season, Uttar Pradesh has set the state advised price for sugarcane at ₹400 per quintal for early-maturing varieties and ₹390 per quintal for common varieties. Similarly, the Haryana government has raised the SAP for sugarcane to ₹415 per quintal for the early variety to and ₹408 for the late variety.

Farmers also expect strict enforcement of the rule mandating timely payment (within 14 days) for cane supplied to mills. “This is a common practice violated by the sugar mills. The provision of penalties or interest for delayed payments to be automatically implemented, without lengthy litigation," said Jagdeep Singh, a farmer from Kaithal district in Haryana.

Arvind Mohan, former political researcher at Lokniti, the research programme of the Delhi-based Centre for the Study of Developing Societies, and now an independent political commentator, said that the proposed draft order appears to reduce the role of cooperatives while giving greater control to sugar mills. “I see this from the perspective of sugar mills gaining a stronger edge over cooperatives. Under the existing decades-old control order, farmers were already at the mercy of sugar mills, but cooperatives still had some influence to safeguard their interests. The proposed draft is likely to give a free hand to mills, which is not in the interest of farmers," said Mohan.

“The draft order could have political implications, especially in sugarcane-growing states like Uttar Pradesh, Maharashtra, and Karnataka," Mohan added. “In these regions, cooperatives are not just economic institutions but part of the local political structure. Weakening their role in favour of private sugar mills could upset long-standing power dynamics and trigger farmer discontent," he added.

ISMA, the industry body of private sugar mills, has released its first estimates, projecting India’s net sugar production at 30.95 million tonnes (mt) for the 2025-26 season that began on 1 October. Around 3.4 mt of sugar is expected to be diverted for ethanol production this season.