India’s sugar industry has expressed disappointment with the Union Budget, as it failed to address long-pending demands related to minimum selling price (MSP) of sugar and ethanol pricing, even as sugar production has risen sharply and cane payment arrears continue to grow.
Sugar production in the country has increased by around 18% compared to last year. However, higher output has also led to rising sugar stocks and growing delays in payments to sugarcane farmers. Industry stakeholders had expected the Budget to announce an increase in sugar MSP and ethanol prices, but no such relief was provided.
No Hike in Sugar MSP or Ethanol Prices
The sugar industry has been demanding that the Centre raise the MSP of sugar from ₹31 per kg to at least ₹42 per kg. The Budget, however, did not take any decision on this issue. Similarly, the industry’s demand for a ₹5 per litre increase in ethanol prices also went unaddressed.
Former Maharashtra Sugar Commissioner Shekhar Gaikwad said that over the past five years, both cooperative and private sugar mills have made heavy investments in sugar and ethanol projects, largely funded through borrowings.
“The industry was expecting some support from the Union Budget to help recover these investments. The absence of any specific provision for sugar and ethanol has left the sector disappointed,” he said.
‘Budget Focused on Urban India’
B.B. Thombare, President of the West Sugar Mills Association (WISMA), criticised the Budget, saying it appeared to be focused mainly on urban consumers and entrepreneurs.
“Beyond general announcements on increasing farmers’ income, there are no concrete financial provisions for sugarcane farmers, the sugar industry, oil sector or agro-processing industries. It feels like the Budget is meant largely for urban India and industry,” he said.
Sugar Production Continues to Rise
According to the Indian Sugar Mills Association (ISMA), India’s sugar production stood at 19.50 million tonnes as of January 31, 2026, compared to 16.48 million tonnes during the same period last season. A total of 515 sugar mills are currently operational across the country, up from 501 mills last year.
Production in Maharashtra has surged this season, reaching 7.87 million tonnes, nearly 42% higher than last year. The state currently has 206 mills in operation, compared to 190 at the same time last season.
Uttar Pradesh has produced 5.51 million tonnes of sugar so far, while Karnataka’s output stands at 3.81 million tonnes, about 15% higher than the corresponding period last year.
Cane Payment Arrears on the Rise
ISMA Director General Abinash Verma (or DG Ballani as referenced) said that sugarcane payment arrears are increasing as the season progresses and sugar stocks continue to build up.
“The mismatch between rising production costs and realisation from sugar sales is putting operational and cash-flow pressure on mills,” he said. He added that a timely revision of the minimum selling price of sugar, in line with rising costs, is critical to ensure the financial stability of the sector, enable timely payments to farmers, and maintain overall market stability—without placing an additional burden on the government.
