Centre to allow 1.5 mn tonnes sugar exports, scrap 50% molasses duty

Sources in the sugar industry said the food ministry has decided to allow exports of 1.5 million tonnes of sugar in 2025-26, but a final nod from a high-powered group of ministers is still awaited

In a significant development, the Central government is looking to permit around 1.5 million tonnes of sugar exports in the 2025–26 season and abolish the 50 per cent export tax on molasses to improve realisations and help farmers receive faster payments.

 

The sugar season runs from October to September.

 

Food Minister Prahlad Joshi, in a recent letter to Karnataka Chief Minister Siddaramaiah during the ongoing sugarcane farmers’ agitation in the state, said that in January 2025, when ex-mill prices of sugar were showing a downward trend, the Centre permitted sugar mills to export 1 million tonnes of sugar to manage the surplus in the country.

 

As a result, the ex-mill prices of sugar immediately improved from about Rs 3,370 per quintal to Rs 3,700–3,930 per quintal in Karnataka after the export decision.

 

“For the current sugar season also (2025–26), the Central government has decided to allow the export of 1.5 million tonnes of sugar and has also removed the 50 per cent export duty on molasses,” the letter said.

 

Sources in the sugar industry said the food ministry has, in principle, decided to allow exports of 1.5 million tonnes of sugar in 2025–26, but a final nod from a high-powered group of ministers is still awaited.

 

In the 2025–26 sugar season, mills have been pressing for permission to export at least 2 million tonnes of sugar to tide over surplus production and help them clear cane dues on time. “We are hopeful that the balance 0.5–1 million tonnes of sugar exports of the demanded 2 million tonnes will be allowed after December 2025,” a senior industry official said.

  

Joshi, meanwhile, in his letter, said that as a result of the many pro-farmer measures taken by the Central government, the cane arrear payment position has improved significantly in the country, including in the state of Karnataka.

 

He said that prior to 2014, there were agitations by farmers for cane payment, but now cane payments are being made on time.

 

In Karnataka, cane arrears for the sugar seasons 2022–23 and 2023–24 are nil, and for the 2024–25 sugar season, only Rs 50 lakh is pending as sugar arrears as of September 30, 2025. 

  

Karnataka Chief Minister Siddaramaiah, in a letter written a few days ago ahead of his discussions with sugarcane farmers, blamed the Centre for fixing a low Fair and Remunerative Price (FRP) and demanded that it compensate for the same.

 

On Friday, the Chief Minister, in a meeting with the protesting farmers in the northern districts of the state, decided to fix the price at Rs 3,300 per tonne of sugarcane, yielding a recovery of 11.25 per cent.

 

He also appealed to the protesting sugarcane farmers to cooperate by accepting the new price and withdraw the agitation.

 

Sugarcane farmers have been protesting across several districts of north Karnataka, including Belagavi, Bagalkot, Vijayapura, and Haveri, demanding a procurement price of Rs 3,550 per quintal.

 

Their main demand was that although the Centre had fixed a higher Fair and Remunerative Price for the 2025–26 season, mills were paying them less. They also demanded that the state government compensate them for the loss by announcing a special State Advised Price (SAP).

  

Food Minister Prahlad Joshi, who also hails from the state, said in his letter that the Centre fixes the Fair and Remunerative Price (FRP) of sugarcane for every sugar season (October–September) on the recommendations of the Commission for Agricultural Costs and Prices (CACP).

 

The Commission for Agricultural Costs and Prices (CACP) considers various factors such as the cost of production of sugarcane, market prices of sugar and by-products, sugar recovery rates, reasonable margins for farmers, and returns from alternative crops.

 

He said the approved Fair and Remunerative Price (FRP) of Rs 355 per quintal for 2025–26 covers the cost of production for all sugarcane-producing states and provides a margin of 105.2 per cent over the cost of production.

 

With each increase of recovery by 0.1 per cent, farmers will get an additional Rs 3.46 per quintal. At an average recovery of 10.5 per cent in Karnataka, the FRP will be Rs 363 per quintal.

 

There has been an appreciable increase in FRP in the past decade, which can be gauged from the fact that an FRP of Rs 210 was announced in 2013–14, giving a margin of 79.2 per cent over the cost of production.

 

In India, the Centre fixes the FRP of sugarcane based on several factors, while some states such as Uttar Pradesh, Punjab, Haryana, and Uttarakhand have their own price at which sugar mills have to purchase cane from farmers, which is called the State Advised Price (SAP).

  

India’s sugar production is estimated to rise 16 per cent to 34.35 million tonnes in the current 2025–26 marketing year, which started in September, mainly due to higher output in Maharashtra, according to the latest estimate by the Indian Sugar and Bio-Energy Manufacturers Association (ISMA) released a few days ago.

 

Gross sugar production stood at 29.1 million tonnes in the 2024–25 marketing year (October–September).

 

In its statement, ISMA said the net sugar production (after diversion towards ethanol production) is estimated to rise to 30.95 million tonnes, up from 26.10 million tonnes in the 2024–25 season. It is projected that 3.4 million tonnes of sugar will be diverted to ethanol production in 2025–26, compared to 3.5 million tonnes in the preceding year. 

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