Sugar Industry in India

Janvi Chawla
Tanu Kapoor
Laksha Anand
 Sugar follows a unique sugar season cycle that
stretches from October to September next year. For the
sugar season ending in September 2020, India is
expected to produce 27.2 million tons of sugar.

SUGAR INDUSTRY
• After being the world’s second largest producer of
sugar for the last many years, India has ended up
being the largest producer in the last two years. As
one of the domestic front the Indian sugar industry Brazil diverts more of its sugarcane to ethanol
has a turnover of rupees 700 per annum there are production, Indian sugar producers have been going
553 install sugar miles in the country e with a aggressive on the back of better prices.
production capacity of 180 lakh mt of sugar these
are located in 18 states of the country with • . This industry involves a total capital investment of
Maharashtra contributed over one third of it about Rs. 1,250 crore and provides employment to 2.86 lakh
60% of these Mills are in the the cooperative sector workers. In addition, 2.50 crore sugarcane growers
35% of the total are in the private sector and rest in
the public sectoralmost 75% of the sugar available also get benefit from this industry.
in the open market is consumed by consumers right
bakery scandal makers sweet makers and suffering Your Logo or Name Here 2
manufacturers
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GROWTH AND DEVELOPMENT OF

SUGAR INDUSTRY

India is rightly called the homeland of sugar

In the early years of the 20th century, the industry grew

rather sluggishly and there were only 18 mills in 1920-21
and 29 mills in 1930-31. After World War II and some
stability was experienced only after 1950-51. There were
139 mills producing 11.34 lakh tonnes of sugar in 1950-51.
After that, the plan period started and the industry made
rapid strides. In the year 1994-95, there were 420 mills
producing 148 lakh tonnes of sugar

Although there has been a steady increase in production

on the long term basis.

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 Localisation of Sugar Industry
Sugar industry in India is based on sugarcane which is a heavy, low
value, weight losing and perishable raw material. Sugarcane cannot
be stored for long as the loss of sucrose content is inevitable
. Normally, it requires about 100 tonnes of sugarcane to produce
10-12 tonnes of sugar. Even today most of sugarcane is transported
with the help of bullock carts and cannot be carried beyond 20-25
km
The introduction of tractor- trolleys, trucks and even railway wagon
have increased the distance covered by sugarcane to 70-75 kms.
beyond which the transportation cost would increase exorbitantly.
Therefore, the sugar industry is established in areas of sugarcane
cultivation.
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 DISTRIBUTION OF SUGAR INDUSTERY IN INDIA

Sugar industry has two major areas of concentration. One comprises Uttar Pradesh, Bihar, Haryana and
Punjab in the north and the other that of Maharashtra, Karnataka, Tamil Nadu and Andhra Pradesh in the
south.
Maharashtra:
Maharashtra has progressed a lot and captured first position from U.P. to emerge as the largest producer
of sugar in India. Large production of sugarcane, higher rate of recovery and longer crushing period are
some of the factors which have helped the state parts of the country.
Uttar Pradesh:
Uttar Pradesh is the traditional producer of sugar and has been occupying the first rank among the major
sugar producing states of India.
Tamil Nadu:
Tamil Nadu has shown phenomenal progress with regard to sugar production during the last few years.
High yield per hectare of sugarcane, higher sucrose content, high recovery rate

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Karnataka:
Karnataka has 30 mills producing 1,151 thousand tonnes or over 6 per cent of the
total sugar of India. Belgaum and Mandya districts have the highest concentration of
sugar mills
Andhra Pradesh:
Andhra Pradesh has more mills (35) than the neighbouring Karnataka but produces
only 6.01 per cent of India’s sugar. This means that the mills are comparatively
smaller.
Gujarat:
Gujarat’s 16 mills are scattered in Surat, Bhavnagar, Amreli, Banaskantha,
Junagarh, Rajkot and Jamnagar districts.
Haryana:
Haryana has only 8 mills but their large size enables the state to contribute 1.91 per
cent of the total sugar production.

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 Problems of Sugar Industry

Sugar industry in India is plagued with several serious and complicated problems which
call for immediate attention and rational solutions. Some of the burning problems are
briefly described as under
1. Low Yield of Sugarcane:

Although India has the largest area under sugarcane cultivation, the yield per hectare is
extremely low as compared to some of the major sugarcane producing countries of the
world.
2. Short crushing season:

Manufacturing of sugar is a seasonal phenomena with a short crushing season varying

normally from 4 to 7 months in a year.
3. Fluctuating Production Trends:

Sugarcane has to compete with several other food and cash crops like cotton, oil seeds,
rice, etc. Consequently, the land available to sugarcane cultivation is not the same and the
total production of sugarcane fluctuates.

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4. Low rate of recovery:
It is clear from Above that the average rate of recovery in India is less than ten per
cent which is quite low as compared to other major sugar producing countries.
5. High cost of Production:
High cost of sugarcane, inefficient technology, uneconomic process of production
and heavy excise duty result in high cost of manufacturing.

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 GOVERNMENT POLICIES AND
INTERVENTION

 The concept of Statutory Minimum Price (SMP) of sugarcane was replaced with the
‘Fair and Remunerative Price (FRP) of sugarcane for 2009-10 and subsequent
sugar seasons. The cane price announced by the Central Government is decided
on the basis of the recommendations of the Commission for Agricultural Costs and
Prices (CACP) after consulting the State Governments and associations of sugar
industry.
Under the FRP system, the farmers are not required to wait till the end of the
season or for any announcement of the profits by sugar mills or the Government.
The new system also assures margins on account of profit and risk to farmers,
irrespective of the fact whether sugar mills generate profit or not and is not
dependent on the performance of any individual sugar mill
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 Why sugar demand has been tepid?
 

Nearly 60% of sugar demand in India comes from industrial demand coming from service outlets like
restaurants, cafes and fast food joints. This segment suffered due to closure of malls and
restaurants. Sugar demand also comes from confectioners, cola makers, beverage companies,
biscuits makers etc. While industrial production is getting back to pre-COVID levels, the 3 months of
production shutdown is a sunk cost. It is estimated that the industrial segment could see 13-14%
contraction in SY2019-20.
Household consumption accounts for 35% of total demand. On one hand, lower income levels
reduced monthly sugar consumption. At the same time, lockdown led to people spending more time
at home. This has triggered higher demand for sugar related beverages and snacks. The net effect
has been that demand contraction in household segment will be about 2%. However, both the
industrial segment and the household segment are likely to see a sharp recovery in demand for
sugar from the last quarter of 2020

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SUGAR PRICES IN INDIA LAST YEAR

Month Price Change

Jan 2015 21.13 -0.92 %

Dec 2015 21.31 0.83 %

Jan 2016 20.86 -2.11 %

Dec 2016 27.84 -8.39 %

Jan 2017 30.65 10.09 %

Dec 2017 20.56 -3.97 %

Jan 2018 19.73 -4.03 %

Dec 2018 19.83 -1.38 %

Jan 2019 19.81 -0.11 %

Dec 2019 21.36 6.78 %

Jan 2020 22.11 3.54 %

Dec 2020 22.83 -0.82 %

Jan 2021 24.86 8.86 %

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