Centre moves to revamp Sugarcane Control Order, invites stakeholder feedback by May 20
The government is overhauling its 60-year-old sugarcane rules to enforce 14-day farmer payment deadlines and bring ethanol production into the industry's core legal framework. The draft order modernizes definitions for by-products and digital reporting while maintaining strict mill-spacing rules.
India is overhauling its six-decade-old rules for the sugar sector, proposing strict 15% interest penalties for mills that fail to pay farmers within two weeks and bringing the growing ethanol sector within the government’s ambit.
In a significant move, the ministry of consumer affairs, food and public distribution, in the draft Sugarcane (Control) Order, has mandated that sugar mills must pay farmers within 14 days of cane delivery. In case of failure, mills will be required to pay interest at 15% per annum to farmers. The move is seen as farmer-friendly and aimed at ending delays in payments.
The order also strengthens recovery mechanisms, allowing dues to be collected as arrears of land revenue through local authorities.
- Mandatory 14-day payment window for farmers with a 15% annual interest penalty.
- Unpaid dues may be recovered as land revenue through local authorities.
- Ethanol production is officially integrated into sugar industry regulatory and pricing frameworks.
- Traditional khandsari units now require mandatory licensing and must pay fixed prices.
- Digital reporting through APIs was introduced to modernize industry data and compliance tracking.
Mint on 10 November reported that the government is reviewing a law to modernize and simplify outdated regulations governing the world’s second-largest sugar producer.
The consumer affairs ministry issued the proposal on 20 April, inviting comments from states, industry bodies, and other stakeholders by 20 May. In a government order dated 20 April 2026, the department of food and public distribution (DFPD) said ‘technological advancements in the sugar sector’ and structural changes in the industry necessitate a revamp of the existing Sugarcane (Control) Order, 1966.
One of the key changes in the draft is the broader definition of ‘producer’, which now includes entities using sugarcane juice, sugar, or molasses to manufacture downstream products not meant for direct consumption. The draft also formally brings ethanol, produced from sugarcane juice, syrup, or molasses, within the regulatory ambit.
It defines ‘by-products’ such as bagasse, molasses, and press mud, reflecting their growing economic importance. The order also expands the concept of ‘food business’ and ‘food business operator’, aligning with existing food safety regulations.
Ethanol power
Additionally, the draft lays down detailed specifications for khandsari or unrefined sugar, including quality parameters such as sucrose content and permissible impurities.
The draft retains the system of Fair and Remunerative Price (FRP) for sugarcane, to be fixed by the government based on factors such as cost of production, returns from alternative crops, sugar recovery rates, and by-product value.
A notable provision links ethanol production directly with sugar output for pricing calculations. The draft specifies that 600 litres of ethanol produced from sugarcane-based feedstock will be treated as equivalent to one tonne of sugar for determining conversion rates.
This reflects the increasing policy focus on ethanol blending and the diversification of sugar mills into biofuel production.
The government retains powers to regulate sugarcane distribution and supply through ‘reserved areas’ for mills, ensuring adequate cane availability. It can also mandate agreements between farmers, cooperatives, and mills for supply.
The draft continues restrictions on setting up new sugar mills within a 25-km radius of existing ones, though states may prescribe larger distances with prior approval. It also lays down detailed procedures for setting up new mills, including mandatory filing of Industrial Entrepreneur Memorandum (IEM) and submission of performance bank guarantees.
Provisions for digital reporting
The proposed order introduces provisions for digital reporting, allowing the government to seek data through application programming interfaces (APIs) or other electronic modes. It also grants authorities powers for inspection, search, and seizure to ensure compliance.
Licensing provisions for crushers and khandsari units remain, along with regulatory oversight on production, storage, and distribution of sugar and related products.
According to experts, the draft also seeks to regulate the khandsari units by making licence mandatory for them and also subjecting them to regular checks and inspections.
An agriculture sector expert said the proposed overhaul could mark a structural shift in the sugar economy. “Timely payment enforcement and the integration of ethanol into the pricing framework are positive steps that strengthen the financial stability of farmers,” Binod Anand, an agriculture expert and member of the MSP Committee of the government.
About the Authors
Vijay C. Roy is a journalist with over 21 years of experience covering various news beats across different organisations such as Business Standard and The Tribune. In the past, he has covered beats such as finance, auto, MSME, commodities, FMCG, pharmaceutical, agriculture, IT/ITES, infrastructure and start-ups. He joined Mint in February 2025, and covers agriculture, food processing, fertilizers, environment and climate change, bringing over two decades of experience reporting on farm policy, food inflation, crop trade, and rural livelihoods.<br><br>Vijay’s areas of reporting include food security and climate change policies, focusing on their impact on different stakeholders and their implications. His expertise lies in simplifying complex agri-economic issues such as edible oil import dependence, cotton and wheat trends, fertiliser subsidies, and climate-related risks. He has covered key developments including global supply disruptions and evolving trade policies, offering both macroeconomic perspective and field-level context. Known for his credible and balanced reporting, he follows a rigorous, fact-based approach that prioritises accuracy and context. He is driven by a commitment to public interest, aiming to make critical agricultural and economic issues accessible while contributing to informed policy and industry discussions.
Dhirendra Kumar is a seasoned policy reporter with about 20 years of experience in deep, on-ground reporting across key economic and governance sectors. His work spans finance, public expenditure, disinvestment, public sector enterprises, textiles, trade, consumer affairs, and agriculture, with a strong focus on uncovering structural policy shifts and their real-world impact.<br><br>Kumar has been awarded the Chaudhary Charan Singh Award for Excellence in Journalism in Agricultural Research and Development, recognising his contribution to reporting on critical issues in the farm sector. He has also been a recipient of a fellowship in international trade from the National Press Foundation, which has further strengthened his coverage of global trade dynamics and their implications for India.<br><br>Kumar is known for breaking complex policy developments into clear, accessible stories. His reporting focuses on uncovering under-reported trends, explaining policy shifts, and helping readers stay informed about developments that shape India’s economic landscape.
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