India’s Sugarcane Price Hike Buys Farmers More, Mills Less
₹10 more per quintal lifts cane income, but without higher sugar MSP or ethanol prices, mills will still absorb the squeeze.
The Cabinet’s move to raise sugarcane FRP to ₹365 per quintal for 2026-27 gives Delhi a fast rural signal, and ISMA is cheering because it preserves farmer support without settling the larger pricing fight. The industry says the higher floor will lift income for nearly 5.5 crore farmers and add ₹15,000-20,000 crore to cane payments next season, but its real demand is for the Centre to align sugar and ethanol prices with the new cane cost (
The Hindu; The Hindu).
Why the industry welcomes it — and still wants more
This is the familiar trade-off in 
India: protect the farm vote first, then manage the mill balance sheet. The FRP increase follows last year’s move to ₹355 per quintal for 2025-26, so the direction is consistently upward even if the step size is modest (The Hindu). The new formula also keeps payment linked to recovery rates, with a ₹3.56 premium or deduction for every 0.1% above or below 10.25%, and no deduction for mills below 9.5% recovery — a cushion for inefficient mills, but still a higher raw-material bill overall (The Hindu).
The pressure point is downstream
Mills are not objecting to farmers getting paid; they are objecting to being left with a fixed sugar price. Frontline reported in March that the sugar Minimum Selling Price has stayed at ₹31/kg since 2019, even as FRP has climbed from ₹2,750 per tonne in 2018-19 to ₹3,550 per tonne in 2025-26, and mills in Maharashtra were still carrying large payment arrears (
Frontline). The same report said ethanol procurement rates have also been static, which matters because mills increasingly rely on ethanol to offset weak sugar margins (Frontline).
That is the real power dynamic: the Centre can announce a farm-friendly FRP in one meeting, but it cannot keep the sector solvent without revisiting sugar MSP and ethanol pricing. The winners today are cane growers and the political messaging around them; the losers, unless prices move, are mills in Uttar Pradesh, Maharashtra and Karnataka that must now pay more for cane before they know whether they can recover it.
What to watch next
Watch for a Cabinet decision on sugar MSP or ethanol prices before the 2026-27 crushing season begins in October. If Delhi does not move, the FRP hike will improve farmer cash flow immediately, but it will also deepen the squeeze on mill liquidity and push the arrears problem back onto state governments and lenders.
