Indian sugar mills demand hike in MSP of sweetener and ethanol procurement prices by OMCs
India’s sugar industry has urged the government to raise the minimum selling price of sugar and ethanol procurement rates after the FRP hike increased cane costs. Mills warned that weak ex-mill prices and rising arrears are straining cash flows despite higher 2025-26 sugar production.
The sugar industry has asked for an upward revision in the minimum selling prices (MSP) of the sweetener and ethanol procurement prices by oil marketing companies, given the increased raw material costs due to the hike in the fair and remunerative prices for sugarcane.
The Indian Sugar and Bio-energy Manufacturers Association (ISMA) said these revisions are necessary for maintaining operational stability and ensuring timely cane payment to farmers.
The sugar mills had earlier urged the government to increase the MSP of sugar from the current level of ₹31/kg to at least ₹36-37/kg in line with the hike in the FRP. MSP has remained unchanged since 2018. In June 2018, the government introduced the concept of MSP of sugar so that the industry could get at least the minimum cost of production of the sweetener to enable them to clear cane price dues of farmers.
“Escalating production costs, coupled with subdued ex-mill realisation, are exerting significant pressure on mill cash flows and contributing to a rise in cane payment arrears,” ISMA stated in a note.
Rs 2310 cane arrears in April
In Maharashtra, the biggest sugar producer, cane arrears stood at Rs 2,130 crore in mid April compared to Rs 752 crore reported during the same period last year. On Tuesday, the government approved a 3% hike in the Fair and Remunerative Price (FRP) of sugarcane, raising it to Rs 365 per quintal, which mills must pay farmers for the 2026-27 sugar season (October-September) to Rs 365/quintal.
Sugar companies stocks decline moderately
Shares of major sugar companies – Triveni Engineering, Balram Chini, Shree Renuka Sugar and Mawana Sugar- declined on Wednesday, after the government announced a hike of Rs 10/quintal in the FRP of sugarcane for the next sugar season.
Shares of Balrampur Chini and Triveni Engineering declined by 1.06% and 1.52% to Rs 525.15 and Rs 407.05 respectively on the BSE on Wednesday compared to the previous day’s trading, while Shree Renuka Sugar shares declined by 1.19% to Rs 29.16.
Shares of Mawana Sugar declined marginally to Rs 118.65 on Wednesday compared to previous trading day on Tuesday (May 5).
The central government announces the FRP annually before the start of the sugarcane crushing season. It is the threshold price that mills are legally bound to pay to cane growers.
Many state governments, including Uttar Pradesh and Tamil Nadu, have their own cane pricing policy and announce their sugarcane rates, known as the State Advised Price (SAP), which is over and above the FRP.
According to ISMA, the sugar production in the 2025-26 season reached 27.52 million tonnes (MT) by the end of April, a 7% increase from 25.65 MT during the same period last year. This output excludes diversion for ethanol manufacturing.
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Source : Financial Express
