The sugar industry in India is currently facing a severe crisis due to a combination of weak domestic demand and an abundant supply of sugar.

This has resulted in the price of sugar falling to its lowest level in over a year and a half, causing significant financial strain on sugar mills.

These mills are struggling to pay off dues to sugarcane growers, which could worsen as crushing activities ramp up in key producing states.

A major contributing factor to the industry's plight is the government's decision to ban the commercial export of sugar since June 2023, severely limiting the mills' revenue streams, which are now largely confined to the domestic market.

If the price remains low, the industry's situation is likely to worsen, and the financial stability of mills could deteriorate further.

The sugar industry has been advocating for an increase in the ex-factory Minimum Selling Price (MSP) of sugar for quite some time.

Although the government had previously considered this request, it was postponed due to high open market prices during the festive season.

However, with prices falling, the industry argues that immediate action is required to restore balance. The key concern is that while the Fair and Remunerative Price (FRP) for sugarcane has risen, the MSP for sugar has remained unchanged for the last five years, leading to an unsustainable rise in production costs.

In Kolhapur, Maharashtra, the price of sugar has decreased by around 8% in the past four months to approximately ₹33,675 (around $397.60) per tonne, which is the lowest since June 2023. The industry is now urging the government to increase the MSP to ₹40,000 per tonne.

If this issue is not addressed soon, the financial strain on mills and the wider sugarcane farming community could deepen, creating long-term challenges for the industry and the millions of small-scale producers dependent on it.