Sugar Industry In India

Sugar is extracted from two raw materials beet root

and sugarcane, both produce identical refined sugar.
Sugar cane accounts for two-third of the raw
material used for sugar production in the world and
beet root one third balance of the world production.
India is the second largest producer of sugar in the
world with 10 to 12% production of the world after
Brazil.
In India, sugarcane accounts for the key raw
material for production of sugar. Maharashtra and
Uttar Pradesh account for majority of produce of
sugar in India. Sugar industry is the 2nd largest
agro-processing industry in India accounting for 1 %
of India s GDP for fy2005. India’s cultivation area of
4-4.5 million hectare accounts for India’s 2.7%
cropped area.
The production of sugar has always been in deficit
over the demand with production of only 17.5 million
tonne over the 19 million tonne consumption for the
year 2005-06 a factor leading to in Indian
Government on Sugar Industry.

According to Dow Jones’s report, the global demand

would be more than the supply in 2008/2009 by 1.6
million tonne.According to the International Sugar
Organization (ISO), the country wise sugar
production is as:
Initiatives
The following policy initiatives are taken to boost the
Sugar industry:
 Government declared the new policy on
August 20, 1998 with regards to licenses for
new factories, which shows that there will
be no sugar factory in a radius of 15 km.
 Setting up of Indian Institute of Sugar
Technology at Kanpur is meant for
improving efficiency in the industry.
 In the year 1982, the sugar development
fund was set up with a view to avail loans
for modernization of the industry.
Sugar Production In states

The following table shows level of sugar production

(In Lakh Tonnes) in Indian States:

2002- 2003- 2004-05

State
03 04 Estimated
Uttar Pradesh 58.74 46.08 50.32
Maharashtra 61.64 31.99 22.29
Karnataka 17.98 11.57 13
Tamil Nadu 17.04 11.9 9.84
Andhra
11.88 8.81 9.75
Pradesh
Gujarat 12.38 10.77 8.32
Haryana 5.99 5.86 4.03
Uttaranchal 4.59 3.93 3.82
Punjab 5.11 3.88 3.37
Bihar 4.21 2.77 2.77
Madhya
0.85 0.94 0.85
Pradesh
Other 0.91 1.09 1.58

The sugar production in the states largely depends

upon monsoon. From 1998-03 good monsoon
resulted a larger production of sugar in the country.
Problems

Sugar is the second largest agro-based industry in

India. The industry provides employment to about
two million skilled and semi-skilled workers besides
those who are employed in ancillary activities,
mostly from rural areas. Though the industry
contributes a lot to the socioeconomic development
of the nation, it is plagued with a number of
problems such as cyclical fluctuations, high
support prices payable to farmers, lack of
adequate working capital, partial decontrol and
the uncertain export outlook. Despite the
problems, the industry has good growth potential
due to steady increase in sugar consumption, retail
boom and diversification into areas such as power
generation and production of ethanol. In addition to
this, strong possibilities exist for counter trade, if the
Government designs and develops sugar industry-
oriented policies.

Steps Need to be Taken

India is one of the largest producer of sugar in the

world and so also the consumer. It can manage its
inventory to its advantage by rotating the same
through imports and exports. The following steps
should be taken for the the improvement in sugar
industry and are:
 Agriculture growth pegged at 3.5% -
sugar cane has to be compete and
compete on its own.
 There exists a potential in terms of
increase in productivity, extraction and
production.
 Like in the past planners/policy
makers/farmers producers - should get
together to form a policy also acceptable
to politicians.
 Optimistion of sugar mill capacity -
vertical growth need of the day.
 Pricing

o Decontrol may not be the answer - at

the same time dual pricing policy has to go
to provide level playing field for all
sweeteners.
o Govt. can procure sugar from market
and subsidies in case; it is a must for PDS.
o For the good of consumer, farmer and
the mills sugar price should move in a band,
meaning monthly inflow to market to be
regulated by Government.
o Balanced export/import policy.

 Mills and farmers should work together to

improve yield and extraction through
better harvesting.
 To become internationally competitive -
i.e. cost effective and quality producer.
 To be ready for free marketing i.e. to
hedge on futures.
With consistent policy and competitiveness, India
can be a regular player in the international market.