Centre moves to revamp Sugarcane Control Order, invites stakeholder feedback by May 20

The Centre has initiated a comprehensive review of the six-decade-old Sugarcane (Control) Order, 1966, a key regulatory framework governing India’s sugar sector, signalling major reforms aimed at modernising the industry and aligning it with evolving economic and energy priorities. In a significant move, the Ministry of Consumer Affairs, Food and Public Distribution, in the draft Sugarcane (Control) Order, has mandated that sugar mills must pay farmers within 14 days of cane delivery. In case of failure, mills will be required to pay interest at 15% per annum to farmers. The move is seen as farmer-friendly and aimed at ending delays in payments.

The order also strengthens recovery mechanisms, allowing dues to be collected as arrears of land revenue through district collectors.

Earlier, Mint on 10 November reported that the government is reviewing a law to modernize and simplify outdated regulations governing the world’s second-largest sugar producer.

The Ministry of Consumer Affairs, Food and Public Distribution issued the proposal on April 20, inviting comments from states, industry bodies, and other stakeholders by May 20, 2026. In an government order dated 20 April 2026, the Department of Food and Public Distribution (DFPD) said “technological advancements in the sugar sector” and structural changes in the industry necessitate a revamp of the existing Sugarcane (Control) Order, 1966.

It defines “by-products” such as bagasse, molasses, and press mud, reflecting their growing economic importance. The order also expands the concept of “food business” and “food business operator”, aligning with existing food safety regulations.

Additionally, the draft lays down detailed specifications for khandsari sugar, including quality parameters such as sucrose content and permissible impurities.

The draft retains the system of Fair and Remunerative Price (FRP) for sugarcane, to be fixed by the Centre based on factors such as cost of production, returns from alternative crops, sugar recovery rates, and by-product value.

A notable provision links ethanol production directly with sugar output for pricing calculations. The draft specifies that 600 litres of ethanol produced from sugarcane-based feedstock will be treated as equivalent to one tonne of sugar for determining conversion rates.

This reflects the increasing policy focus on ethanol blending and the diversification of sugar mills into biofuel production.

The Centre retains powers to regulate sugarcane distribution and supply through “reserved areas” for mills, ensuring adequate cane availability. It can also mandate agreements between farmers, cooperatives, and mills for supply.

The draft continues restrictions on setting up new sugar mills within a 25-km radius of existing ones, though states may prescribe higher distances with prior approval. It also lays down detailed procedures for setting up new mills, including mandatory filing of Industrial Entrepreneur Memorandum (IEM) and submission of performance bank guarantees.

Licensing provisions for crushers and khandsari units remain, along with regulatory oversight on production, storage, and distribution of sugar and related products.

The central government has floated a draft amendment to the marquee Sugarcane (Control) Order, 1966, which regulates the entire sector, proposing a minimum distance of 25 kilometre between mills, and underlying the need for khandsari units to pay the fixed fair and remunerative price (FRP) to cane growers.

According to experts, the draft also seeks to regulate the khandsari units by making licence mandatory for them and also subjecting them to regular checks and inspections.

Khandsari is a traditional, unrefined raw sugar derived from cane. Comments to the draft, which was floated on Monday, are required to be sent by May 20.

An agriculture sector expert said the proposed overhaul could mark a structural shift in the sugar economy. “Timely payment enforcement and the integration of ethanol into the pricing framework are positive steps that strengthen the financial stability of farmers,” Binod Anand, an agriculture expert and member MSP Committee of the government.

Looking ahead, Anand added that the reforms could improve farmer confidence and liquidity.