Sugar Industry Pushes GST Relief on Biofuels Amid 22% Surge in Output
India’s sugar production has risen sharply in the ongoing 2025–26 season, prompting the industry to seek tax and policy support in the upcoming Union Budget. As of January 15, all-India sugar output stood at 159.09 lakh tonnes, nearly 22% higher than a year ago, with 518 mills currently operational. Maharashtra has led the growth with a 51% year-on-year jump in production, while Uttar Pradesh and Karnataka have also recorded increases, reflecting strong crushing progress across major producing states.
Despite higher output, the Indian Sugar and Bio-energy Manufacturers Association (ISMA) warned that mill finances are under strain. Rising state-level sugarcane prices have widened the gap between costs and realisations, while ex-mill sugar prices in key states have slipped below production costs. With inventories building up, the industry fears mounting cane payment arrears unless corrective measures, including an early revision of the Minimum Selling Price (MSP) of sugar, are implemented to restore financial viability and ensure timely payments to farmers.
Looking beyond immediate concerns, ISMA has urged the government to use Budget 2026–27 to promote biofuels and clean mobility through GST rationalisation and targeted financial support. The association has proposed lower GST rates on flex-fuel and hybrid vehicles, higher ethanol blends, ethanol production equipment and ethanol-based cookstoves, alongside incentives for advanced biofuels such as sustainable aviation fuel, green bio-hydrogen and compressed biogas. ISMA also wants sugar mills to be developed into integrated bio-energy hubs, arguing that biofuels can help cut emissions, reduce fuel imports and stabilise rural incomes while absorbing surplus sugar capacity.
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