Govt's move to regulate khandsari sugar units sees a weak start
India's khandsari industry is slowly adapting to new regulations aimed at ensuring fair prices and transparency. With only 11 out of 66 large units registered, the government anticipates a surge in compliance as the sugarcane crushing season approaches.
New Delhi: The government’s effort to bring India’s traditional khandsari, or unrefined sugar, industry under formal regulation has seen a slow start, with only 11 of the 66 large units having registered on the National Single Window System (NSWS) portal so far, two people aware of the matter said. Registrations are likely to pick up by the start of the sugarcane crushing season next month, industry people said.
Khandsari units, small, cottage-style factories that produce unrefined sugar from cane, were brought under the Sugar (Control) Order, 2025 in May. Units with a crushing capacity exceeding 500 tonnes per day (TCD) were brought under regulatory oversight.
The move, aimed at ensuring fair prices for farmers and curbing untracked diversion of sugarcane and molasses, is key to improving transparency across the sugar and ethanol value chain and improving the accuracy of India's sugar production estimates.
Ethanol oversight
The decision supports the government’s broader objectives, especially the ethanol blended petrol (EBP) programme. With sugarcane juice and syrup being critical feedstock for ethanol production, it is essential to ensure that large quantities are not diverted without oversight. Accurate tracking of sugarcane usage will help align ethanol output targets and sugar availability more efficiently.
There are 373 operational khandsari units across India having a combined crushing capacity of about 95,000 TCD. Of these, 66 units fall under the new regulation, as they exceed 500 TCD capacity, collectively accounting for around 55,200 TCD.
“Around 11 units have registered themselves on the NSWS portal and a majority of them are from Maharashtra," said the first person cited above. Of the total 66 units, around 50 are in Uttar Pradesh.
Asked about the reason for the weak response, the second official said, "The khandsari units operate nearly for 90-120 days in a year. The Sugar (Control) Order, 2025, was introduced on 1 May. During that time, most of the units were closed, so we are anticipating that before the start of the upcoming cane crushing season (1 November), they will register themselves."
The khandsari industry is a seasonal one. "We were unable to register as our season ended in March, so our office was closed. But we will get registered after Diwali, before the onset of the crushing season," said an official at a khandsari unit.
Industry experts said the lack of oversight on the khandsari units had led to issues such as untracked diversion of sugarcane and molasses, resulting in revenue losses and disruptions to the sugar and ethanol supply chains. Regulating these large units will help improve accountability and ultimately benefit farmers.
"The units would be required to pay the Fair and Remunerative Price (FRP) for sugarcane, just like the regular sugar mills," said Puneet Singh Thind, a farm expert and founder of a northern farmers mega farmer producer organization (FPO).
Queries regarding the development emailed to the ministry of food and public distribution were unanswered till press time.
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