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India Becomes World’s Largest Producer & Consumer of Sugar: Food Ministry

The sugar industry's success is a result of coordinated and collaborative efforts by the Central and State Governments, farmers, sugar mills, and ethanol distilleries, as well as a very supportive overall business environment in the country.

Shivam Dwivedi
The success of the sugar industry is the result of synchronous and collaborative efforts by the Central and State Governments, farmers, sugar mills, and ethanol distilleries
The success of the sugar industry is the result of synchronous and collaborative efforts by the Central and State Governments, farmers, sugar mills, and ethanol distilleries

During the Sugar Season (October-September) 2021-22, the country produced a record of more than 5000 Lakh Metric Tons (LMT) sugarcane, of which approximately 3574 LMT was crushed by sugar mills to produce approximately 394 LMT of sugar (Sucrose). 35 LMT sugar was diverted to ethanol production, while sugar mills produced 359 LMT sugar. 

As a result, India has surpassed the United States as the world's largest producer and consumer of sugar, as well as the world's second largest exporter of sugar. The season has proven to be a watershed moment for the Indian sugar industry. During the season, all records of sugarcane production, sugar production, sugar exports, cane procured, cane dues paid, and ethanol production were made. Another highlight of the season was the highest exports of about 109.8 LMT, achieved with no financial assistance that was extended until 2020-21. Supportive international prices and Indian Government Policy led to this feat of Indian Sugar Industry. These exports earned the country approximately Rs. 40,000 crores in foreign currency.

The success of the sugar industry is the result of synchronous and collaborative efforts by the Central and State Governments, farmers, sugar mills, and ethanol distilleries, as well as a very supportive overall business environment in the country. Since the last five years, timely government interventions have been critical in building the sugar sector step by step, from financial distress in 2018-19 to self-sufficiency in 2021-22.

Sugar mills procured sugarcane worth more than 1.18 lakh crore and released payment worth more than 1.12 lakh crore during SS 2021-22 with no financial assistance (subsidy) from the Government of India. Thus, at the end of the sugar season, cane dues are less than 6,000 crore, indicating that 95% of cane dues have already been cleared. It is also worth noting that for SS 2020-21, more than 99.9% of cane dues have been paid. The government has been encouraging sugar mills to divert sugar to ethanol and export surplus sugar so that sugar mills can pay cane dues to farmers on time and mills can operate in better financial conditions.

The growth of the ethanol biofuel sector in the last five years has greatly aided the sugar sector, as the conversion of sugar to ethanol has resulted in better financial positions for sugar mills due to faster payments, reduced working capital requirements, and less fund blockage due to less surplus sugar with mills. Sugar mills/distilleries made approximately Rs 18,000 crore in revenue from the sale of ethanol during 2021-22, which also played a role in the early clearance of farmers' cane dues.

Ethanol production capacity of molasses/sugar-based distilleries has increased to 605 crore litres per year, with progress still being made toward meeting 20% blending targets by 2025 under the Ethanol Blending with Petrol (EBP) Program. Sugar diversion to ethanol is expected to increase from 35 LMT to 50 LMT in the new season, generating approximately 25,000 crores in revenue for sugar mills.

There is an ideal closing balance of 60 LMT of sugar, which is required to meet domestic demand for 2.5 months. The conversion of sugar to ethanol and exports resulted in the unlocking of the entire industry's value chain as well as improved financial conditions of sugar mills, resulting in more optional mills in the following season.

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