01-JULY-2025,02:36PM In a critical statement reflecting the urgency of policy intervention, the Indian Sugar Mills Association (ISMA) has called on the government to ensure timely approval of sugar exports and the diversion of sugar for ethanol production. The association emphasizes that any delay in policy decisions could severely hamper the sustainability and financial health of sugar mills across the country.
As India stands at a strategic crossroads—balancing domestic demand, international trade opportunities, and its ambitious biofuel targets—industry experts believe a clear and scheduled approach to sugar exports and ethanol diversion is crucial. ISMA’s recent appeal shines a light on the challenges sugar mills face and the critical steps needed to safeguard this agro-based industry.
Sugar Exports Crucial for Financial Health of Sugar Mills
Sugar Exports : ISMA Raises Concerns on Delays
In its statement, ISMA warned that uncertainty over the approval of sugar exports and ethanol production plans is creating serious liquidity issues for sugar mills. These approvals are typically aligned with the sugar marketing year, which runs from October to September. When such decisions are delayed, mills face a cash crunch, making it difficult for them to pay farmers on time or invest in operational upgrades.
The association urged the central government to announce its export and diversion policies well before the sugar season begins. This would provide mills with the clarity and time needed to plan production, storage, and marketing efficiently.
Sugar Exports : Exporting Surplus Sugar Helps Stabilize Prices
India is among the largest producers of sugar globally, often producing more than the country’s domestic consumption requirements. This surplus, if not managed through sugar exports, can lead to excess supply in the domestic market, driving down prices and eroding mills’ profitability.
ISMA noted that exporting this surplus not only brings in valuable foreign exchange but also helps maintain stable domestic sugar prices, which is essential for the economic viability of the sector. A robust export policy, announced in advance, ensures that India can take advantage of favourable global sugar prices and maintain its position as a reliable exporter.
Sugar Exports : Ethanol Diversion a Win-Win for Environment and Industry
Aligning with India’s Ethanol Blending Targets
The diversion of sugar towards ethanol production is a cornerstone of India’s energy transition strategy. The government’s ambitious target of achieving 20% ethanol blending in petrol by 2025 has placed increased responsibility on sugar mills to produce ethanol.
ISMA highlighted that mills are ready to play their part, but timely approvals and clarity on diversion limits are necessary. By ensuring scheduled decisions on the quantum of sugar allowed for ethanol conversion, the government can facilitate better planning and investment in ethanol distillation capacities.
Environmental and Economic Benefits of Ethanol
The shift towards ethanol not only reduces the country’s dependence on fossil fuels but also offers sugar mills a valuable revenue stream. Ethanol prices are often more stable and attractive compared to fluctuating sugar prices.
Moreover, ethanol production is seen as a sustainable alternative that aligns with global climate goals. With the right government support and regulatory timelines, this shift can drive long-term sustainability for the sugar sector while contributing to a greener economy.
Challenges Faced by the Sugar Industry
Payment Delays to Farmers
One of the biggest fallout effects of delays in sugar exports and ethanol diversion policies is the inability of sugar mills to promptly pay sugarcane farmers. This has a ripple effect on the rural economy, especially in states like Maharashtra, Uttar Pradesh, and Karnataka where sugarcane farming is a major livelihood.
ISMA warned that continued delays could result in mounting cane arrears, leading to social and political tensions in key agrarian regions. A timely export and diversion policy can help mills maintain cash flow and fulfil their payment obligations.
Storage and Inventory Management Issues
Another pressing issue is inventory management. In the absence of export approvals, sugar stocks pile up at mill warehouses, increasing the burden of storage costs and inventory losses. Excessive stock also puts downward pressure on domestic prices, worsening the mills’ financial woes.
ISMA believes that a pre-announced export policy would enable mills to manage their inventories more efficiently, ensuring better storage utilization and reduced wastage.
Government Support Essential for Sector Stability
Need for Transparent and Predictable Policy Framework
While the government has supported the sugar sector through various measures in the past—including subsidies, buffer stock schemes, and ethanol incentives—ISMA now demands a predictable policy framework that allows for long-term planning.
Predictability in the quantum of exports and ethanol diversion would help mills secure financing, invest in capacity upgrades, and ensure uninterrupted operations throughout the sugar season.
Coordinated Approach Between Ministries
ISMA also called for better coordination between the Ministry of Food and Public Distribution, Ministry of Petroleum and Natural Gas, and Ministry of Commerce. A unified and streamlined decision-making process could drastically improve the response time and reduce bureaucratic hurdles.
Such a coordinated approach is vital not just for the sugar industry, but also for India’s broader energy, trade, and rural development objectives.
Conclusion
The message from ISMA is clear: sugar exports and ethanol diversion decisions must be made in a timely and scheduled manner to ensure the long-term sustainability of India’s sugar industry. With the sector contributing significantly to rural employment, energy security, and international trade, delays in policy implementation can have far-reaching consequences.
As India prepares for the next sugar marketing year, the government must heed ISMA’s call and take proactive steps to support an industry that stands at the crossroads of agriculture, energy, and economic growth.
Source : ANI
