India’s cooperative sugar sector has flagged deepening financial stress even as the country’s overall sugar availability remains stable, prompting renewed calls for urgent policy intervention from the Centre.
The National Federation of Cooperative Sugar Factories Limited (NFCSF) has urged the government to revamp financial relief measures for cooperative mills, particularly the existing One Time Settlement (OTS) scheme under the Sugar Development Fund (SDF), which it says has delivered limited results.
A delegation led by Harshvardhan Patil and Managing Director Prakash Naiknavare met Ashish Kumar Bhutani, Secretary at the Ministry of Cooperation, in New Delhi to present a detailed representation highlighting the sector’s concerns.
According to the federation, cooperative sugar mills are grappling with a combination of rising sugarcane procurement costs, weak sugar price realisations, and mounting cane arrears payable to farmers. These pressures have severely constrained liquidity across mills, limiting their ability to service loans and sustain operations.
The NFCSF pointed out that the current OTS framework has failed to attract sufficient participation due to the high interest burden attached to outstanding dues. To make the scheme more viable, the federation has proposed a comprehensive overhaul, including a waiver of at least 50 per cent of normal interest along with penal interest. Such measures, it argued, would incentivise mills to opt for settlement and improve recovery rates.
Despite these financial strains, the federation maintained that India’s sugar supply position remains stable for the 2025-26 season. Estimated production is pegged at around 281 lakh tonnes after accounting for a diversion of 28 lakh tonnes towards ethanol manufacturing. With an opening stock of 50 lakh tonnes, total availability is expected to reach 331 lakh tonnes.
This supply is considered adequate to meet domestic consumption of about 280 lakh tonnes and facilitate exports of around 10 lakh tonnes. Closing stocks are projected at 41 lakh tonnes, the lowest since 2016-17 but still within a manageable range.
However, the mismatch between production costs and market prices continues to weigh heavily on the sector. The all-India average ex-mill price of sugar is currently around Rs 3,850 per quintal, while the cost of production is estimated at about Rs 4,100 per quintal. This gap of roughly Rs 250 per quintal is resulting in sustained losses for mills, further aggravating liquidity issues and delaying payments to cane growers.
The NFCSF emphasised that timely government intervention is critical not only to stabilise cooperative sugar mills but also to ensure that farmers receive their dues without delay. It reiterated its commitment to working closely with policymakers to secure the long-term sustainability and financial health of the sector.
