Revised FRP to boost farmer incomes by Rs 15,000–20,000 Crore; industry urges integrated policy support for sustainable growth and ethanol expansion

The Indian Sugar & Bio-energy Manufacturers Association (ISMA) warmly welcomes the Government’s decision to increase the Fair and Remunerative Price (FRP) of sugarcane by Rs 10 per quintal for the 2026–27 sugar season to Rs 365 per quintal of cane. This progressive and farmer-friendly step reflects the Government’s continued commitment to strengthening farmer welfare and enhancing rural prosperity.

The revised FRP is expected to significantly boost farmer incomes, benefiting nearly 5.5 crore sugarcane farmers across the country. It is estimated that this increase will result in an additional income of over Rs 15,000–20,000 crore, taking total cane payments to around Rs 1.3 lakh crore in the upcoming season. This will provide a strong impetus to rural demand and reinforce the agricultural economy, particularly in regions where sugarcane cultivation is a primary livelihood.

ISMA commends the Government for its proactive approach and responsiveness to the needs of the farming community.

At the same time, ISMA respectfully highlights the importance of aligning the Minimum Selling Price (MSP) of sugar and ethanol procurement prices with the revised FRP of sugarcane. Such alignment is essential to ensure financial sustainability across the entire value chain—from farmers to sugar mills.

While the FRP increase rightly supports farmers, it also raises the cost of raw material for mills. A proportionate revision in sugar MSP and ethanol procurement prices would enable mills to absorb these higher costs without financial strain, thereby maintaining operational stability and ensuring timely cane payments to farmers.

Further, lower ethanol allocation to the sector has also led to a growing mismatch between installed distillation capacity and domestic offtake. This has resulted in underutilisation of capacities, contributing to financial stress and erosion of revenue streams within the industry. A timely revision in sugar and ethanol pricing, along with equitable ethanol allocation, is essential to restore feedstock balance, improve capacity utilisation, and provide long-term policy certainty to investors and stakeholders.

In the context of rising crude oil prices and evolving geopolitical dynamics, the strategic importance of accelerating ethanol blending has become even more pronounced. With an estimated production capacity of nearly 2,000 crore litres (including grain-based ethanol), there is a strong case for advancing a forward-looking roadmap beyond E20 towards higher blends such as E22, E25, E27, and E85/E100. This should be complemented by the expedited rollout of flex-fuel vehicles (FFVs) and rationalisation of GST to facilitate broader adoption and demand creation.

Such policy alignment would strengthen the financial health of sugar mills, improve liquidity, and ensure that farmers receive their dues in a timely and efficient manner.

ISMA remains confident that the Government will consider these important aspects with the same foresight and balanced approach demonstrated in revising the FRP, thereby supporting both the farming community and the sugar industry in a sustainable and inclusive manner.