India moves to overhaul six-decade-old sugarcane law, proposes sweeping 2026 control order
India has proposed a new Sugarcane (Control) Order, 2026 to replace the 1966 law, marking a major policy overhaul. The draft integrates ethanol into pricing, strengthens farmer payment rules, and tightens mill regulations—signaling a shift toward a more modern, biofuel-linked sugar industry framework.
The Union government has circulated a draft Sugarcane (Control) Order, 2026, seeking to replace a law that has governed India’s vast sugar sector since 1966. The Ministry of Consumer Affairs, Food and Public Distribution issued the proposal on April 20, inviting comments from states, industry bodies, and other stakeholders by May 20, 2026.
The move signals one of the most significant regulatory resets in the country’s sugar industry in decades, driven by what the government describes as sweeping technological advances that have rendered the existing framework inadequate.
“Due to the technological advancements in the Sugar Sector, there are multiple changes in the sugarcane sector which necessitates the revamping of existing the Sugarcane (Control) Order, 1966.”
Among the most consequential changes is the formal recognition of ethanol as a core output of sugar mills. Under the draft, factories producing ethanol directly from sugarcane juice, syrup, or molasses will see every 600 litres of ethanol they produce counted as equivalent to one tonne of sugar – a provision that could significantly reshape how mills are assessed for price compliance and production quotas.
Key provisions at a glance
Fair and Remunerative Price (FRP) for sugarcane retained; mills must pay within 14 days of delivery
Delayed payments attract interest at 15% per annum
No new sugar factory allowed within 25 km of an existing mill
Ethanol production formally integrated into sugar factory definitions and pricing formulas
Transfer of Industrial Entrepreneur Memorandums (IEM) banned before commercial production begins
The draft retains – and sharpens – the existing Fair and Remunerative Price mechanism, under which the Central Government sets the minimum price sugar mills must pay farmers for cane. Crucially, mills that fail to pay within 14 days of cane delivery will be liable for interest at 15 per cent per annum on the overdue amount. Unpaid dues can be recovered by district collectors as arrears of land revenue, a provision designed to give teeth to farmer protections.
The order also introduces tighter rules around the establishment of new sugar factories. No new mill may come up within a 25-kilometre radius of any existing factory, though state governments may, with Central approval, increase that buffer. Project proponents are required to submit a performance bank guarantee of Rs 2 crore and file an Industrial Entrepreneur Memorandum with the government – and must commence commercial production within five years of the guarantee being accepted, or risk forfeiture.
Notably, the draft bars the transfer or sale of these memorandums to third parties before a factory begins production – a measure aimed at curbing speculative applications. Exceptions are carved out only for court orders or insolvency proceedings under the National Company Law Tribunal.
The consultation has been sent to a wide cross-section of stakeholders, including the Ministries of Agriculture, Petroleum, Cooperation, and Legal Affairs, as well as the Food Safety and Standards Authority of India (FSSAI), all sugarcane-producing states, the National Sugar Institute in Kanpur, Vasantdada Sugar Institute in Pune, and industry associations including ISMA, NFCSF, and AISTA.
The draft, if notified, will formally repeal the 1966 order in its entirety – though existing licences, permits, and price fixations issued under the old regime will continue to have force until superseded. The new order is set to take effect on the date of its publication in the Official Gazette.
Industry observers say the inclusion of ethanol-related definitions and the integration of by-product valuation – covering bagasse, molasses, and press mud – reflect the government’s ambition to align sugar policy with India’s national biofuel programme. Whether farmers see the same enthusiasm for the proposal as millers remains to be seen.
To read full notification click here
To read Sugarcane (Control) Order, 1966
To Read more about Sugar Industry continue reading Agriinsite.com
Source : Chinimandi
