Sugar industry raises concerns over draft amendments to Sugarcane Control Order, flags ‘Inspector Raj’ risk
India’s sugar industry has raised concerns over proposed amendments to the Sugarcane Control Order, citing stricter regulations, inspection powers, and distance norms. While aimed at balancing stakeholders, mills fear increased compliance burdens and seek revisions to protect operational flexibility.
New Delhi: The sugar industry has expressed widespread unease over proposed amendments to the Sugarcane (Control) Order of 1966, which the Central government floated for public comment last week, with mills particularly wary of stricter regulatory oversight, new distance norms, and expanded powers of inspection that some in the sector are describing as a potential return to “Inspector Raj,” Business Standard reported.
The draft amendments, which have been in preparation for a long time, propose a minimum distance of 25 kilometres between sugar mills, make licences mandatory for khandsari units, and subject those units to regular checks and inspections. They also require khandsari operators to pay the Fair and Remunerative Price (FRP), as fixed by the Central government, to sugarcane growers. Khandsari is a traditional, unrefined raw sugar derived from cane. Stakeholders have been asked to submit their comments on the draft by May 20.
According to the report, around 31 per cent of India’s annual sugarcane production of 435 million tonnes is consumed by gur, khandsari, and jaggery units.
On cane payments, the draft proposes that mills pay interest at 14 per cent per annum to growers for any delay beyond the mandatory 14-day window from the date of cane purchase. In cases where dues remain unpaid at the close of a sugar year, mills would be required to deposit the outstanding amount with the district collector of the area in which the factory is located, within three months of the year’s end. The collector would then settle verified claims from suppliers within a three-year window, with any undisbursed amounts transferred to the Consolidated Fund of the State.
The draft also proposes linking the FRP to ethanol production, using the formula that 600 litres of ethanol derived from cane juice or syrup is equivalent to one tonne of sugar, allowing FRP to be determined on the basis of ethanol output as well. It further specifies timelines for Industrial Entrepreneur Memorandum (IEM) applications, requiring applicants to complete land acquisition, machinery procurement, and construction within three years, and to commence commercial production within five years. Transfer or sale of an IEM licence to a third party before production begins would be prohibited under the draft, with the aim of curbing speculative applications.
The draft also stipulates that if a sugar factory remains closed for seven consecutive sugar seasons, its IEM would be automatically derecognised, freeing the area for new entrants. On the FRP calculation methodology, it proposes valuing by-products such as bagasse, molasses, and press mud at transfer price rather than final product profit, which is described as a more transparent approach.
The draft has arrived months before state elections in Uttar Pradesh, one of India’s principal sugarcane-producing states, and is being read in several quarters as an effort to balance the interests of farmers, millers, and the largely unorganised gur and khandsari sector, the report noted.
Industry sources told the publication that a formal response would be submitted to the government by May 15, ahead of the official deadline. The prevailing sentiment within the sector is one of caution, with mills uncomfortable about the expanded inspection and search powers envisaged in the draft. On the distance norm, the industry is seeking a reduction from the proposed 25 kilometres to 15 kilometres, citing the practice already followed in several states. Mills have also called for molasses to be brought under the regulatory framework and for the gur and khandsari segment to be more comprehensively covered under the revised order.
“There are some preliminary concerns regarding the proposed amendments, but a final view will emerge from our one-day brainstorming session in Pune to be scheduled for May 15,” a senior industry official was quoted as saying.
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Source : ChiniMandi
