India’s ISMA, coop sugar mills seek incentives to offset early crushing losses

Indian Sugar and Bio-energy Manufacturers Association (ISMA) and National Federation of Cooperative Sugar Factories (NFCSF) have offered their support to the government to begin crushing operation 10-15 days earlier in October so that supply in domestic market improves during festival season.

This comes at a time when the country faces low sugar availability, with the prospect of limited import looming large. However, both the industry bodies want the government to announce incentives for compensating their financial losses.

In a joint letter addressed to Union Food Secretary Sanjeev Chopra on Thursday, ISMA Director-General Deepak Ballani and NFCSF Managing Director Prakash Naiknavare said that as the industry’s decision to advance crushing has been taken primarily in the national interest to strengthen sugar availability and moderate prices during the festive season, the government should support in enabling mills to absorb the associated financial and operational burden.

‘Proactive’ decision

They requested the government to consider appropriate support to compensate recovery loss to partly offset the losses associated with the early commencement of crushing. Other incentives sought include additional domestic sugar sale quota equivalent to the sugar production in October or waiver of CGST on domestic sugar sales.

Recalling a meeting with the government officials on July 17, the letter said that the sugar industry had proposed to commence the 2026-27 sugar season (October-September) nearly 10-15 days earlier than the normal schedule, subject to prevailing agro-climatic conditions. The proactive decision would enable fresh sugar to reach the domestic market well ahead of the festive season, further reinforcing consumer confidence and ensuring smooth supplies across the country.

In a press statement, both ISMA and NFCSF, claimed that India “continues to have adequate sugar stocks to comfortably meet domestic consumption requirements”, and there is no cause for concern regarding sugar availability. The proposal to advance crushing reflects the sector’s continued commitment to supporting the government’s efforts to ensure uninterrupted supplies and a well-balanced domestic market, they said.

On the recent spurt in sugar prices, both these associations said that it is not reflective of the underlying demand-supply fundamentals. During the current (2025-26) sugar season, pan India average sugar prices up to June were around ₹39.50-40 per kg (ex-mill), which was below the average cost of production. Even after the recent increase, the season’s average realisation up to July reached ₹40–40.50 per kg, which is still below the cost of production of ₹42 per kg.

Price movement

While the industry’s calculation on the average realisation between October 2025 and July 2026 may be correct, the government’s concern is the moving prices in retail market now, which is driven more by sentiments rather actual demand-supply since a perception has been created about an impending shortage based on the statistical data. The uncertainty gained further strength when the government ordered on July 24 physical sugar stock verification at mill level. It is speculated that the sugar in India as on October 1, 2026 may be marginally higher than the month’s actual consumption, not sufficient to meet demand during November.

Both ISMA and NFCSF highlighted that their member-mills have already paid around Rs 1.10 lakh crore to the sugarcane farmers in the current sugar season. “The recent price movement should therefore be viewed in its proper context and not as an indication of any supply constraint,” the statement said.

The early commencement of crushing entails significant operational and financial implications for sugar mills, they pointed out listing the disadvantages. Early commencing crushing is expected to result in lower sugar recovery and reduced cane yields, thereby affecting the operational efficiency and financial viability of mills.

The government on July 28 issued an Order fixing a stock limit of 400 tonnes maximum quantity of sugar that any dealer can keep at any point of time till November 30 and traders have been mandated to liquidate excess stock by August 1 from when the directive will be implemented. Besides, the sugar dealers have been asked to sell the sweetener within 30 days from the date of receipt.

Published on August 6, 2026