With India’s sugar production registering a sharp rise in the ongoing 2025-26 season, the Indian Sugar and Bio-energy Manufacturers Association (ISMA) has urged the government to use the Union Budget 2026-27 to push GST rationalisation and policy support for biofuels and clean mobility, while also addressing growing financial stress in the sugar sector.
Sugar Production Sees Strong Growth
As of January 15, 2026, all-India sugar production stood at 159.09 lakh tonnes, nearly 22% higher than the 130.44 lakh tonnes produced during the same period last year.
The number of operational sugar mills has increased to 518, compared with 500 mills at the same stage a year ago, reflecting steady progress in cane crushing across major producing states.
Maharashtra Leads, UP and Karnataka Also Up
Maharashtra has emerged as the strongest performer this season, with sugar output at 64.50 lakh tonnes, a 51% year-on-year increase, supported by higher crushing rates and a rise in the number of active mills.
Uttar Pradesh has produced 46.05 lakh tonnes, around 8% higher than last year, while Karnataka has reported a 13% increase in production so far this season.
Financial Stress Persists Despite Higher Output
Despite the robust production trend, ISMA has cautioned that mill finances are under increasing pressure. Recent hikes in sugarcane prices by several state governments have widened the gap between input costs and sugar realisations.
Ex-mill sugar prices in key producing states such as Maharashtra and Karnataka have declined to around ₹3,550 per quintal, which is below the current cost of production. With inventories building up, the industry fears a rise in cane payment arrears unless policy interventions are undertaken.
Demand for Early Revision of Sugar MSP
In this context, ISMA has renewed its call for an early revision of the Minimum Selling Price (MSP) of sugar. The association argues that a cost-aligned MSP is essential to restore financial viability for mills, ensure timely payments to farmers, and maintain market stability, without increasing the government’s fiscal burden.
Budget 2026 Focus on Biofuels and Clean Mobility
Alongside immediate market concerns, ISMA is pushing for longer-term structural reforms through the upcoming Union Budget. The association has sought comprehensive GST rationalisation across the biofuels and clean mobility ecosystem, including significant GST cuts on:
- Flex-fuel vehicles and strong hybrid electric vehicles
- Higher ethanol blends such as E85 and E100
- Ethanol production machinery and equipment
- Ethanol-based cookstoves
Support for Advanced Biofuels and Bio-Energy Hubs
ISMA has also called for targeted financial support for advanced biofuels such as sustainable aviation fuel (SAF), green bio-hydrogen, compressed biogas (CBG), and isobutanol blending with diesel.
The industry body has proposed converting sugar mills into integrated bio-energy hubs, capable of producing ethanol, biogas, hydrogen, and green power, to improve long-term sustainability.
Biofuels Seen as a Near-Term Solution
According to ISMA, India already has surplus ethanol capacity, established infrastructure, and proven technologies, making biofuels an immediately deployable solution to reduce emissions, cut fuel imports, and stabilise rural incomes.
As Budget 2026-27 approaches, the sugar industry is urging the government to strike a balance between short-term relief and long-term clean energy policy support, ensuring that a strong production season does not translate into financial stress for mills and farmers.
Source: BusinessToday