India’s two main sugar industry bodies — the Indian Sugar and Bio-energy Manufacturers Association (ISMA) and the National Federation of Cooperative Sugar Factories (NFCSF) — have told the Union government they will back an early start to the 2026-27 crushing season, but only if mills receive incentives to cover the financial losses the shift will cause. In a joint letter to Union Food Secretary Sanjeev Chopra on Thursday, ISMA Director-General Deepak Ballani and NFCSF Managing Director Prakash Naiknavare proposed beginning crushing operations 10-15 days earlier than normal in October to improve sugar availability in the domestic market during the festival season, even as India faces low sugar availability and the prospect of limited imports looms.
Early start aimed at festival-season supplies
According to the joint letter, the industry 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 letter recalled a meeting with government officials on July 17 at which the industry put forward the plan. The proactive decision, the two bodies said, would enable fresh sugar to reach the domestic market well ahead of the festive season, reinforcing consumer confidence and ensuring smooth supplies across the country.
However, the early commencement entails significant operational and financial implications for sugar mills, they pointed out. Early crushing is expected to result in lower sugar recovery and reduced cane yields, thereby affecting the operational efficiency and financial viability of mills.
The incentives sought by ISMA and NFCSF include:
- Recovery-loss compensation — appropriate government support to compensate recovery loss and partly offset the losses associated with early commencement of crushing.
- Additional sales quota — an additional domestic sugar sale quota equivalent to the sugar production in October.
- CGST waiver — a waiver of CGST on domestic sugar sales.
Price realisation still below cost of production
ISMA and NFCSF argued that the recent spurt in sugar prices does not reflect underlying demand-supply fundamentals. According to the two bodies, in the current 2025-26 sugar season, pan-India average sugar prices up to June were around ₹39.50-40 per kg (ex-mill), 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, still below the cost of production of ₹42 per kg.
| 2025-26 sugar season metric | Value |
|---|---|
| Pan-India average sugar price up to June (ex-mill) | ₹39.50–40/kg |
| Season average realisation up to July | ₹40–40.50/kg |
| Average cost of production | ₹42/kg |
| Payments made by member-mills to sugarcane farmers | ₹1.10 lakh crore |
Government sees sentiment driving retail prices
While the industry's calculation on average realisation between October 2025 and July 2026 may be correct, the government's concern is the moving prices in the retail market now, which are driven more by sentiments than by actual demand-supply, since a perception has been created about an impending shortage on the basis of statistical data. The uncertainty gained further strength when the government ordered on July 24 physical stock verification at mill level. Speculation in the market suggests that sugar stocks 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 rejected any supply-constraint reading of the price move. In a joint press statement, they sought to reassure consumers, claiming that India "continues to have adequate sugar stocks to comfortably meet domestic consumption requirements" and that there is no cause for concern regarding sugar availability. They also highlighted that member-mills have already paid around ₹1.10 lakh crore to 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," ISMA and NFCSF said.
The two bodies framed their proposal as a commitment to the national interest: the decision to advance crushing was taken primarily to strengthen sugar availability and moderate prices during the festive season, and the government should support mills in absorbing the associated financial and operational burden, they concluded.
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