Indian Sugar Industry – How It Works and the Way Forward

 

The second largest producer of sugar, India contributes around 20% of the global supply. There are around 5 crore farmers employed and thousands of mills all across the country manufacturing and supplying sugar to cater to our sweet tooth. This is an emerging sugar industry in the country that we are talking about here.

The annual output of the Indian sugar industry is around INR 80,000 crores as of December 2021, according to the Department of Food & Public Distribution. In the 2020-21 sugar season, the production of sugar in the country was around 31 million tons.

Recently in the middle of 2021, the government of India has announced a few measures to make the Indian sugar industry financially independent and globally competitive.  This has been done to make good the debilitating controls and populist policies that were being hitherto implemented which made the country swing between massive surplus and a severe shortage of sugar. The industry is looking out for ways to become self-sufficient and not have to depend on government-funded bail-outs and subsidies.

The whole process started in 2013 when the government went in for decontrolling of the sector mostly the sugar side of the domain. The sugar mills were given the flexibility to sell whatever quantity they wanted to sell at a time and price of their selection. Distribution of levy sugar at subsidized prices through the PDS also ended. However, the controls such as fixing the prices of sugarcane by the government persisted on the sugarcane side of the business, which exists even today.  This marginalized decontrol did not have the total positive impact that was envisaged with the sugar cycle continuing to play out and the woes of the industry refused to go away.

How India Became a Consistently Surplus Sugar Producer

In the year 2016-17, a new variety of sugarcane was developed that delivered significantly larger yield as well as higher recovery. The yield of this variety was 30 tonnes per acre as against 22 tonnes per acre from earlier varieties. The sucrose content was also 11.5 percent as compared to 9.5 percent of earlier crops. This new variety was widely cultivated in Uttar Pradesh and the share of the state in the country’s total output increased from 25 percent to 40 percent.

This made India a consistently surplus producer of sugar and there has not been a looking back for the country since this singular development in sugar production.

Indian Sugar Industry Scenario 2021

Today, the production of sugar in India exceeds its domestic consumption, with a surplus of around 60 lakh tonne that needs to be managed. Export subsidies have been announced to liquidate excess sugar and make exports viable. This move was contested by other nations at the WTO; however, India has been allowed to go on with the subsidies since December 2023.

Sugar Import by Pakistan to Open Another Market for Indian Sugar

According to a statement made by the Indian Sugar Mills Association (ISMA), Pakistan resuming imports of Indian sugar will boost sugar export and encourage the domestic sugar sector into action.

Want to Import Sugar from India? Read on to Know More

The sugar market in India is one of the largest in the world in terms of volume. The production and marketing of sugar are regulated under the Essential Commodities Act since sugar is an essential commodity. Since independence, the control exercised by the governments in power has varied, from total control to partial control and total decontrol. Moreover, improper planning in many situations has made India Import sugar in some instances and export sugar in other situations. The export prices are also many times well below the domestic price of sugar. There is a definite need for well-thought-out government policies to enhance the performance of the sugar mills. Some of the other factors that can have a positive impact on the sugar industry in India are mentioned below.

  • Development of improved seed varieties, enhancement of farm practices, and more efficient crop management with a greater focus on R&D activities.
  • Sorting out of the conflict on cane prices between the Centre and the States to ensure remunerative prices for farmers while also not restricting the millers.
  • Reduction of stringency in the regulations pertaining to Indian Sugar Export.
  • Adoption of cyclicality management practices to bring down arrears and reduce the need for governmental support.



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