Transparent pricing formula linking cane FRP to sugar MSP and ethanol rates needed urgently: Kapil Nema, Dalmia Bharat Sugar executive
India’s sugar industry is seeking a transparent pricing formula linking sugarcane FRP with sugar MSP and ethanol prices. Industry officials warned rising cane costs, El Niño risks, and uncertainty over future ethanol blending targets could pressure mill profitability and investment plans.
New Delhi: The sugar industry is pressing for a transparent pricing mechanism that formally links sugarcane prices with the minimum support price (MSP) of sugar and ethanol procurement rates, as rising input costs continue to squeeze mill margins, Kapil Nema, Deputy Executive Director for Sugar and Ethanol Business at Dalmia Bharat Sugar and Industries, said in an interview with CNBC TV18.
Commenting on the Central government’s decision to raise the Fair and Remunerative Price (FRP) of sugarcane by Rs 10 per quintal for the 2026-27 season, Nema described the hike as moderate and said the measured size of the increase itself was a signal of the stress the industry was already facing. “A modest increase directly tells you also that the government is also reading that the industry is already in stress,” he said. According to Nema, the revised FRP translates into an additional cost of roughly Rs 100 to Rs 110 per tonne for sugar mills in key producing states such as Maharashtra and Karnataka.
While welcoming the decision, Nema said the industry required a more balanced pricing structure, given that sugar and ethanol prices had not moved in proportion to the rise in cane procurement costs. “There has to be an equivalent and a transparent formula, which should link the sugarcane price to the MSP and the ethanol prices,” he said. He added that such a mechanism would give companies the margin and cash flow visibility needed to plan investments and capacity expansion with greater confidence.
On the monsoon, Nema flagged the developing El Niño conditions as a material risk for the upcoming sugarcane crop, saying rainfall during June and July would be the single most critical variable. “Rain is the primary and the most important thing for the sugarcane crop,” he said, noting that most cane-growing regions in India remain heavily dependent on rainfall and are therefore vulnerable to any seasonal disruption.
On the ethanol blending programme, Nema said the industry was awaiting greater policy clarity on the government’s long-term roadmap beyond the current E20 target. He said any move towards higher blending levels such as E22, E25, or E27 would require a defined policy framework to support investment planning in distillery capacity.
On exports, Nema estimated that India was likely to ship around 7.5 lakh to 8 lakh tonnes of sugar during the current season, as competition from Brazil and Pakistan in the global market intensified. He noted that domestic sugar prices were gradually firming up during the off-season, which could weigh on India’s export competitiveness in the months ahead.
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Source : ChiniMandi
