A Sugar Industry in India

Sugar in India is produced mainly from sugarcane. After cotton textile industry, it is second largest industry in India. India is the world’s largest producer of sugarcane and second largest producer of sugar after Brazil. India is the only country in the world that produces plantation white sugar.

It has also been mentioned in Atharva Veda and hence dates back to ancient age. India is rightly called the homeland of sugar. But in ancient times, only Gur and Khandsari were made and modem sugar industry came on the Indian scene only in the middle of the 19th century.

Location and Distribution

Sugar industry in India is based on sugarcane which is a heavy, low value, weight losing and perishable raw material. Sugarcane cannot be stored for long as the loss of sucrose content is inevitable. Aso, It cannot be transported over long distances because any increase in transportation cost would raise the cost of production and the sugarcane may dry up on the way. Hence, Sugar Industry in India is found in Maharsathra, Uttar Pradesh, Punjab, Haryana, Gujrat, Bihar, Andhra Pradesh, Telangana, Tamil Nadu, Karnataka etc, which are the major regions of sugarcane production.

Sugar mills of Maharashtra are much larger as compared to the mills in other parts of the country. Uttar Pradesh has more mills than Maharashtra but they are of comparatively smaller size and yield less production. Tamil Nadu has emerged as the third largest producer of sugar, contributing over nine per cent of the total sugar production of India. Among the other producers are Madhya Pradesh, Rajasthan, Kerala, Orissa, West Bengal and Assam.

The sugar industries are more profoundly found in South India than that of North India as it has better modern machinery to churn out the sugar, the tropical climate in South India favours higher yield and hence sugar content is procured. The cooperative sugar mills are better managed and the crushing season is longer too in the south.

Problems faced

1. There is low yield of sugar per hectare as compared to the rest of the world.

2. The modern technology is missing for sugarcane industry.

3. The machines used in sugar industries are old and obsolete.

4. Monoculture of sugarcane i.e. lack of crop rotation in some areas, leads to deletion of nutrients in soil.

5. The rate of recovery is extremely low.

6. The byproducts of sugar like bagasse are not properly utilized like that of the western countries.

7. An irregularity in availability of water is major issue in cultivation of sugarcane crop.

8. Low per capita consumption is another issue.

9. Government policies are highly centralized and not dependent on market forces.

10. Inadequate availability of quality seed of new sugarcane varieties and poor seed replacement rate adversely affect the realization of potential cane yield of varieties.

11. There are regional imbalances when it comes to sugar industry. Maharashtra and Uttar Pradesh yield the highest while in other states like Odisha, Jammu and Kashmir and other north eastern states, there is no appreciable growth.

12. There are many sick sugar industries and they are closed due to various reasons.

13. Sugar has to compete with other crops and cash crops too.

14. Sugar also has to compete with Gur and Khandari which is usually favored.

15. The production cost of sugar in India is one of the highest in the world.

16. There is short crushing season hence the workers are jobless for the rest of the year.

17. Most of the sugar mills in India are really small and hence uneconomic in size.

18. It comes under the “Red “Category which implies it is a highly polluting industry.

19. The political ownership or their large share in cooperative sugar mills cause delays in payment to farmers. The corruption due to political ownership further cause higher price and poor productivity in sugar mills.

Government Efforts and Committee’s Recommendations

1. Indian Institute of Sugar Technology was set up at Kanpur.

2. Sugar industry was removed from compulsory licensing.

3. Discontinuation of sugar through PDS was another effort made.

4. Sugar Development Fund was set up in 1982 to avail funds for the modernization of the industry.

5. In 1998, Government declared new license policy where there can be no other sugar industry within a radius of 15 km. This criterion help to create the monopoly of mill owner over a large area and ultimately led to exploitation of farmers. Also this regulation prohibits innovation and investment by entrepreneurs. Hence Rangarajan Committee suggested that in order to increase competition and ensure a better price for farmers, the distance norm be reviewed and there should be no monopoly over farmers especially whose landholdings are small.

6. Rangarajan Committee proposed that the states should encourage development of market-based long-term contractual arrangements, and phase out cane reservation area too.

7. Every sugar mill has to sell 10% of total produce to central government at price lower than market price which is known as levy sugar. As tis acts as a burden on mill owner and reduces their viability, Rangarajan Committee suggested that the condition of levy sugar shall be abolished. The government shall buy sugar directly from market for the purpose of PDS.

8. There are various restrictions posed by central government on import and export of sugar and the state governments have posed various regulations on trading of by-products which impede revenue generation for both farmers and mill owners. Rangarajan Committee suggested that Import and export duty shall not be more than 10% and asked to remove all regulations on trade of by products.

9. At present, the Central Government along with the CACP releases an India Fair Price every year before the start of the sugar season. But some states would like to fix a cane price over and above the FRP, which the mills would have to pay to the farmer which is called State Advised Price. Consequent to this, the Sugarcane became the most attractive crop to grow.

Way forward

1. Need a comprehensive, transparent and participative mechanism for calculative price.

2. Government should see that the price rate flights should not hamper the sugar industry.

1. India: A comprehensive Geography by D.R Khullar

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