India's Sugar Industry: In Search of Sweeter Future Prospects

India's Sugar Industry: In Search of Sweeter Future Prospects

The sugar industry in India has a tremendous potential for growth. This agro-based industry is a source of livelihood of 5 crore farmers and 5 lakh workers employed in the sugar mills, according to estimates of experts. India is the second top producer of sugar in the world. The government has to formulate a plan to meet the growing needs of the sugar cane farmers, consumers and sugar mill owners and workers. Only then will this industry attain a solid position in a globally competitive market.

With a total of about 600 mills in India, our country produces nearly 24 million tonnes of sugar each year. More importantly, this sector generates rural direct as well as indirect employment. The Indian sugar industry has been plagued with all sorts of problems recently. The issue of cane dues to the Indian farmers needs to be resolved.

Viable sugarcane pricing that has links with the market price of sugar and sugar by-products such as molasseses is critical for this industry. Experts have suggested the possibility of the stabilisation of sugar pricing through common stock mechanism. Through this mechanism, the government could stock the sugar at times when there is a surplus of production. This can check the volatility of sugarcane prices in domestic markets. But the big problem here is that any policy initiative in this industry would require a nod from the following ministries: petroleum, consumer affairs, petroleum, and food as well as public distribution.

There is also need for coordination between the Centre and the state. At present, the sugarcane producing states of the country include Uttar Pradesh, Tamil Nadu, Karnataka and Gujarat. The state governments of these should also be consulted to come up with good policies in this area. There is need for more investment inflows in the sugar industry. A consistent policy is needed for some improvement in this area.

Policies when implemented can work wonders. Experts have cited the success of the coffee industry in Brazil or the rice industry in the Philippines. One of the recommendations made for the sugar industry by those knowledgeable in this sector is that the 70-30 revenue sharing model needs to be implemented where 70% of the price of the sugar and its by-products goes to the farmer while 30% is allocated to the mills. This can leave the option of the viability of growing sugarcane to the farmer and stabilisation of sugarcane production becomes simpler. This model has been implemented in 4 Indian states already now, including Maharashtra and Karnataka.

The Indian government has to decide how much surplus sugar must be held as common stock. No cane arrears is to be the top priority. The need for more R&D partnerships in this sector is also critical. There is a large potential in this sector to generate employment for workers. India has a large working population residing in rural sectors. The sugar industry is also in need of workers. If the sugar industry is progressing forward, it is only through effective policy implementation.

Encouraging sugar mills to use alternative fuels and increasing the percentage of ethanol-blended fuel is a step being considered by the Centre. Cogeneration plants are the latest factor coming into play when it comes to policies for the sugar industry. With active steps to counter challenges, the sugar industry can become globally competitive. There has been an increase of acreage in the area under sugarcane, the yield has stagnated. This is unlike all other agri-products such as rice. The sugar industry has to be rescued so it can have access to a sweeter future and its true potential can be unleashed.