As sugar production likely to increase in 2025-26, millers, distillers seek ethanol, sugar MSP revision

Even as early estimates indicate India’s gross sugar production before ethanol diversion to increase 18% to around 34.9 million tonnes in 2025-26 (October-September season) against 29.5 tonnes produced last sugar season (SS), Indian Sugar & Bio-energy Manufacturers Association (ISMA), the representative body of sugar mills and ethanol manufacturers, is seeking a revision in ethanol prices to make ethanol production viable.

ISMA wants the government to revise ethanol procurement price in a way that it corresponds with the latest Fair and Remunerative Price (FRP) announced by the government for sugarcane. While ethanol (and sugar) prices indicate the revenue of the sugar mills, FRP is the main cost they need to incur to procure the raw material.

“In the 2025-26 crop year, area under sugarcane cultivation is likely to increase both in Karnataka and Maharashtra. In UP, the area may not increase, but yield is likely to be good. There are reasons. Monsoon has been good, FRP to the sugarcane farmer has been increasing, overall, the crop looks very good”, said Deepak Ballani, director general, ISMA.

In fact, the first preliminary estimate of 2025-26 sugar season (SS) production in the country prepared by ISMA on the basis satellite images suggest the total acreage under sugarcane in the country to be around 57.24 lakh hectares in 2025-26 SS against 57.11 lakh hectares in 2024-25 SS.

In Maharashtra, the cane area has increased to 14.93 lakh hectare for 2025-26 SS, against last year area of 13.82 lakh hectares and the overall crop quality is likely to be significantly better than last year, ISMA observes. A combination of better yields and increased cane area is expected to boost gross sugar production (before diversion) to 13.3 million tonnes against 9.3 million tonnes last year, the industry body estimates.

Similarly, it forecasts a 6% increase in sugarcane area and a 23% increase in gross sugar production in Karnataka. In Uttar Pradesh, ISMA observes a 3% decline in sugar cane area, but states the overall condition of the standing crop is much better than last year. It estimates that gross sugar production (before diversion) in UP to be 10.3 million tonnes against last year production of 10.1 million tonnes.

Ballani points out that the sector is completely regulated by the government. “My input cost, which is the sugarcane price to the farmer, is decided by the government. My product price, i.e., ethanol price, is also decided by the government. If there is no corresponding increase in both these prices, I get completely squeezed. I need to pay back my loans, there is conversion cost, interest on my working capital….FRP has been going up, but not ethanol price. Subject to the price correction, we hope to divert 4.5 million tonnes towards ethanol”, Ballani said.

He also said that the government should increase the minimum selling price (MSP) for sugar to maintain a good stable market.

“MSP was introduced by the government in 2018 when it fixed the MSP of sugar at Rs 29 per kg (no mill can sell below this price, hence market is stabilized). In 2019, it increased to Rs 31 per kg. Since then, the MSP has not been revised. At least 3-4 times in the last couple of years, sugar price had gone below the cost of production. The government should at least fix the price at the cost of production. With the revised FRP, it comes to Rs 40.2 per kg. We want the government to fix MSP of sugar at least at this level so that it does not go below the cost of production. I believe ethanol price and MSP will bring the stability”, Ballani said.

ISMA will reassess the crop condition in August - September period and come out with its 2nd preliminary estimate next month.