Govt overhauls six-decade-old sugarcane law; seeks comments on draft by May 20

The Ministry of Consumer Affairs, Food and Public Distribution has circulated a draft Sugarcane (Control) Order, 2026, proposing to repeal and replace the Su...

What Happened

The Ministry of Consumer Affairs, Food and Public Distribution has circulated a draft Sugarcane (Control) Order, 2026, proposing to repeal and replace the Sugarcane (Control) Order, 1966 — which has governed India's sugar sector for nearly six decades.
The draft order was issued on April 20, 2026, with a deadline of May 20, 2026 for states, industry bodies, and other stakeholders to submit comments.
The proposed order formally recognises ethanol as a core output of sugar mills, integrating ethanol production into the regulatory framework alongside sugar — a significant policy shift that aligns sugar regulation with India's National Biofuel Policy.
A new formula for converting sugarcane into ethanol (separate from the recovery rate used for sugar) is introduced in the draft to facilitate mill-level compliance and fair accounting.
The draft introduces a formal digital compliance mechanism and a structured factory approval process, replacing the older administrative procedures.
Core elements of the 1966 order — including the Fair and Remunerative Price (FRP) mechanism and payment deadlines for sugarcane farmers — are retained.
By-product valuation covering bagasse, molasses, and press mud is incorporated into the draft framework.
Existing licences, permits, and price fixations issued under the 1966 order will continue to have force until superseded by new notifications.

Static Topic Bridges

Essential Commodities Act, 1955 — Section 3 Powers

The Sugarcane (Control) Order derives its legislative authority from the Essential Commodities Act (ECA), 1955. Section 3 of the ECA confers sweeping powers on the Central Government to control the production, supply, and distribution of essential commodities, and to regulate trade in them.

Section 3(1) of the ECA empowers the Central Government to issue orders to regulate or prohibit the production, supply, and distribution of an essential commodity if doing so is necessary or expedient in the interest of the general public.
Sugar and sugarcane are scheduled as essential commodities under the ECA, making both subject to central regulation.
The ECA was originally enacted to address post-Partition shortages and has since been used to regulate everything from petroleum to pulses. The Essential Commodities (Amendment) Act, 2020 sought to deregulate some commodities, but sugar and fertilisers were retained on the list.
Control orders issued under Section 3 are subordinate legislation — they can be modified or repealed by the executive without parliamentary approval.

Connection to this news: The Sugarcane (Control) Order, 2026 is issued under Section 3 of the ECA, making it subordinate legislation. The overhaul does not require parliamentary amendment — it is an executive action, which is why the ministry can issue a draft and seek comments without introducing a bill in Parliament.

Fair and Remunerative Price (FRP) vs. State Advised Price (SAP)

India uses a two-tier pricing mechanism for sugarcane to protect farmers from exploitation by sugar mills.

FRP (Fair and Remunerative Price): The minimum price that all sugar mills across India are legally required to pay to sugarcane farmers. It is fixed annually by the Cabinet Committee on Economic Affairs (CCEA) based on recommendations from the Commission for Agricultural Costs and Prices (CACP). For 2025–26, the FRP is ₹355 per quintal at a basic recovery rate of 10.25%.
SAP (State Advised Price): Several states — notably Uttar Pradesh, Uttarakhand, Haryana, and Punjab — fix a State Advised Price that is higher than the FRP. Mills in these states must pay the higher of the two. The SAP is announced by the state government and is not linked to sugar recovery rates.
CACP: The Commission for Agricultural Costs and Prices, an advisory body under the Ministry of Agriculture, recommends FRP based on cost of production (A2+FL basis), recovery rate, and other economic parameters. Its recommendations are non-binding but almost always accepted by the CCEA.
Payment deadline: Sugar mills are legally required to pay the FRP within 14 days of delivery of sugarcane by farmers.

Connection to this news: The proposed Sugarcane (Control) Order, 2026 retains the FRP mechanism and payment deadline provisions, while additionally introducing an ethanol conversion formula — effectively creating a parallel track for mills that divert cane juice or B-heavy molasses to ethanol production rather than sugar.

National Biofuel Policy 2018 (Amended 2022) and Ethanol Blending

The integration of ethanol into the sugarcane control framework directly links the overhaul to India's biofuel strategy.

The National Policy on Biofuels, 2018, set a target of 20% ethanol blending in petrol by 2030. The 2022 amendment advanced this target to Ethanol Supply Year (ESY) 2025–26.
E20 (20% ethanol blending) was mandated nationwide from April 1, 2026 and achieved as a target in December 2025.
Sugar mills can produce ethanol from: (i) sugarcane juice directly, (ii) B-heavy molasses, and (iii) C-heavy molasses — the feedstock used determines the price paid by Oil Marketing Companies (OMCs).
The government introduced a differentiated pricing structure for ethanol procurement by OMCs, with sugarcane juice-based ethanol commanding the highest price to incentivise diversion away from surplus sugar.
Ethanol production from sugar sector feedstocks reached over 500 crore litres in ESY 2023–24.

Connection to this news: By formally embedding ethanol as a core output in the control order — and introducing a sugarcane-to-ethanol conversion formula — the 2026 draft creates regulatory clarity for mills pursuing the dual-output (sugar + ethanol) model, removing a long-standing ambiguity in the 1966 order which was drafted entirely around sugar production.

Sugarcane Sector — Structural Features and Policy Significance

India is the world's second-largest sugar producer and has one of the most regulated agricultural commodity sectors.

India has approximately 700 operational sugar mills, mostly in Uttar Pradesh, Maharashtra, Karnataka, and Tamil Nadu.
The sugar sector employs approximately 5 crore (50 million) farmers directly and indirectly.
Structural problem: Cyclical overproduction of sugar leads to cane payment arrears (dues owed by mills to farmers). At peak, unpaid dues have exceeded ₹20,000 crore.
The linkage between ethanol policy and sugarcane regulation is designed to reduce surplus sugar production by diverting excess feedstock to ethanol — stabilising mill revenues and reducing farmer payment delays.
The 1966 order's licensing and approval procedures had not been updated to reflect digital operations, creating compliance gaps addressed by the 2026 draft.

Connection to this news: The overhaul reflects the evolution of the sugar sector from a purely food commodity sector to a multi-output agri-energy sector, necessitating a regulatory framework that is simultaneously about farmer price support, food security, and energy policy.

Key Facts & Data

Legislative basis: Sugarcane (Control) Order, 2026 — issued under Section 3 of the Essential Commodities Act, 1955.
Replaces: Sugarcane (Control) Order, 1966 (in force for 60 years).
Ministry: Ministry of Consumer Affairs, Food and Public Distribution.
Comment deadline: May 20, 2026.
FRP for 2025–26: ₹355 per quintal (at 10.25% recovery rate), up by ₹15/quintal (4.41%) from the previous year.
CACP: Commission for Agricultural Costs and Prices — advisory body that recommends FRP; operates under Ministry of Agriculture and Farmers Welfare.
Payment deadline provision: Sugar mills must pay FRP within 14 days of cane delivery.
E20 mandate: 20% ethanol blending in petrol made mandatory nationwide from April 1, 2026.
National Biofuel Policy: 2018 (amended 2022) — target of E20 by ESY 2025–26 achieved ahead of original 2030 goal.
Key new features in draft: Ethanol as recognised core output, digital compliance system, formal factory approval process, by-product valuation framework.
India is the world's second-largest sugar producer and largest consumer.
The sugar industry supports approximately 5 crore farmers across the sugarcane belt.