In the sugar season (October-September) 2021-22, a record over 5000 Lakh metric tonnes (LMT) of sugarcane was produced in the country, out of which about 3574 LMT of sugarcane was crushed by sugar mills to produce about 394 LMT of sugar. (Sucrose). Of this, 35 LMT of sugar was converted to ethanol production and 359 LMT of sugar was produced by sugar mills. This has made India the world’s largest producer and consumer of sugar as well as the world’s second largest exporter of sugar.
The season turned out to be a turning point for the Indian confectionery sector. All records of sugarcane production, sugar production, sugar exports, cane procured, cane dues paid and ethanol production were taken during the season. Another bright highlight of the season is the highest export of about 109.8 LMT, that too without the financial assistance which has been extended till 2020-21. Supportive international prices and Indian government policies have led to this performance by the Indian sugar industry. These exports earned foreign exchange of about Rs. 40,000 crores for the country.
The success story of the sugar industry is the result of synchronous and collaborative efforts of the central and state governments, farmers, sugar mills, ethanol distillers with a very supportive overall business ecosystem in the country. Timely government interventions over the last 5 years have been crucial in building the sugar industry step by step from bringing it out of financial distress in 2018-19 to a self-sustaining stage in 2021-22.
During SS 2021-22 sugar mills purchased sugarcane worth more than 1.18 lakh rupees and released payment of more than 1.12 lakh rupees without financial assistance (subsidy) from Indian government. Hence, cane dues at the end of the sugar season are less than ₹6,000 crore, which means 95% of the cane dues have already been paid. It is also noteworthy that for SS 2020-21, more than 99.9% of cane dues are reimbursed.
The government encourages sugar mills to divert sugar to ethanol and also export surplus sugar so that sugar mills can pay cane dues to farmers on time and also have better financial conditions to continue their operations. The growth of ethanol as a biofuel industry in the last 5 years has greatly boosted the sugar industry, as the use of sugar for ethanol has led to a better financial position for sugar mills due to faster payments, reduced working capital requirements and less blocked funds due to less mill sugar surplus. During 2021-22, sugar mills/distillers generated revenue of around ₹ 18,000 crore from ethanol sales, which also played a role in early billing of cane dues to farmers.
Ethanol production capacity at molasses/sugar distilleries has increased to 605 million liters per year and progress continues to meet the 2025 Ethanol Blending Program (EBP) targets for 20% blending. Diversion of sugar to ethanol is expected to increase from 35 LMT to 50 LMT in the new season, which would generate revenue of about ₹ 25,000 crore to sugar mills. The optimal final sugar balance is 60 LMT, which is necessary to meet domestic requirements for 2.5 months. The diversion of sugar to ethanol and exports has led to the unblocking of the entire industry’s value chain as well as improved financial conditions for sugar mills, leading to more optional mills in the following season.
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