Rising production masks mounting financial stress as mills seek timely price support to clear farmer dues and sustain operations

India’s sugar production for the 2025–26 season has reached 262.14 lakh tons as of March 15, marking a 10.5% increase over 237.24 lakh tons recorded during the same period last year, even as the crushing season enters its penultimate phase. With 157 mills currently operational, down from 182 a year ago, output gains reflect stronger recoveries and improved efficiencies despite fewer active factories.

State-wise performance presents a mixed picture. Uttar Pradesh, the country’s largest producer, has maintained stable output at 81.3 lakh tons, nearly identical to last year, with 78 mills still running. Meanwhile, Maharashtra and Karnataka have driven the overall surge, producing 98.46 lakh tons and 46.04 lakh tons, respectively—significantly higher than last year’s levels—although only 26 factories remain operational across both states. Notably, some mills in southern Karnataka are expected to resume crushing during a special season between June and September 2026, potentially adding to late-cycle output.

Other regions showed varied trends: Gujarat’s production declined to 6.85 lakh tons from 7.78 lakh tons last year, while Tamil Nadu recorded growth to 4.72 lakh tons. Output in “other states” stood slightly lower at 24.77 lakh tons compared to 26.72 lakh tons a year earlier. These figures account for sugar diverted toward ethanol production, reflecting the industry’s ongoing shift toward biofuel integration.

Despite healthy production and comfortable domestic availability, the sector faces mounting financial stress. Rising production costs and subdued ex-mill prices have tightened margins, resulting in higher cane payment arrears. In Maharashtra alone, arrears surged to Rs 4,898 crore as of February 28, 2026, up sharply from Rs 2,949 crore last year.

Industry stakeholders are now urging an early upward revision of the Minimum Selling Price (MSP), arguing that aligning prices with current cost structures is essential to restore liquidity, accelerate farmer payments, and sustain market stability—without imposing additional fiscal burden on the government.