The Indian Sugar & Bio-energy Manufacturers Association (ISMA) has applauded the Union Government's decision to increase the Fair and Remunerative Price (FRP) for sugarcane. Effective for the 2026-27 sugar season, the FRP has been raised by ₹10 per quintal, bringing the new price to ₹365 per quintal. ISMA characterized this step as both progressive and farmer-friendly, anticipating a significant boost to the agricultural sector and rural economies.
Boost for Sugarcane Farmers and Rural Economy
This revised FRP is expected to directly benefit approximately 5.5 crore sugarcane farmers nationwide. According to ISMA, the hike could translate into an additional income ranging from ₹15,000 crore to ₹20,000 crore for farmers, pushing total cane payments to an estimated ₹1.3 lakh crore in the upcoming season. This substantial increase in farmer income is projected to stimulate rural demand and strengthen the agricultural economy, particularly in regions where sugarcane cultivation is a primary source of livelihood.
Industry Concerns and Policy Alignment Needs
While commending the government's proactive approach, ISMA also highlighted critical concerns regarding the financial sustainability of sugar mills. The association pointed out that while the FRP hike supports farmers, it simultaneously increases raw material costs for mills. To mitigate this financial strain and ensure timely payments to farmers, ISMA emphasized the urgent need for policy alignment. Specifically, the industry body called for a proportionate revision in the Minimum Selling Price (MSP) of sugar and ethanol procurement prices.
Addressing Ethanol Policy Mismatches
ISMA further stressed that lower ethanol allocation has led to a significant mismatch between installed distillation capacity and domestic offtake. This imbalance results in underutilization of capacity and financial stress for mills. The association urged for a timely revision in sugar and ethanol pricing, alongside equitable ethanol allocation, to restore feedstock balance and improve capacity utilization. Such measures are deemed essential for providing long-term policy certainty to investors and stakeholders in the sugar and bio-energy sectors.
Push for Higher Ethanol Blending Targets
In the broader context of energy security and rising crude oil prices, ISMA advocated for more ambitious ethanol blending targets. With an estimated production capacity of nearly 2,000 crore liters (including grain-based ethanol), the association urged the government to develop a roadmap beyond the current E20 target, aiming for higher blends such as E22, E25, E27, and even E85/E100. Additionally, ISMA called for a faster rollout of flex-fuel vehicles and rationalization of GST to stimulate demand for ethanol-blended fuels, ensuring a balanced approach that supports both farmers and the sugar industry sustainably.