Amid stagnant or a falling sugar consumption in India, the Indian government has proposed to increase the distance between two sugar mills to 25 km from current 15 km if anyone wishes to set up a new sugar factory. Besides, it has been proposed that the state government will take a call if any existing plant wants to increase its sugar production capacity.

The draft Sugarcane (Control) Order 2026 has been published online by the Union Food Ministry on Tuesday for public feedback by May 20, 2026.

“Notwithstanding anything contained in clause 6, no new sugar factory shall be set up within the radius of 25 km of any existing sugar factory or another new sugar factory in a State or two or more States; provided that the State Government may with the prior approval of the Union Government, where it considers necessary and expedient in public interest, notify such minimum distance higher than 25 Km or different minimum distances not less than 25 km for different regions in their respective States,” the draft Order said.

2025-26 consumption

For expansion of the capacity of existing sugar factories, the State government or any other authority appointed by Union government shall assess the sugarcane availability, sugarcane cultivable area, average yield, operational days of the sugar mill and also not adversely affecting the cane availability of neighbouring sugar mills and other related issues for cultivation of sugarcane in the area, the draft Order said.

India’s sugar consumption in 2025-26 season (October-September) is likely to be about 280 lakh tonnes (lt) as in the first half (October-March) of the current season, the sales are estimated to be 141 lt while similar quantity is seen to be consumed during the second half as well, sources said. The government had allocated 133 lt of sugar for domestic sales in the first half of the current season.

In 2024-25 season, the actual consumption of sugar was 281 lt, as per industry estimate as against an allocation of 275.5 lt of sugar quotas to mills for domestic sales by the government. Earlier this month, Deepak Ballani, director general of Indian Sugar & Bio-energy Manufacturers Association (ISMA) had said that sugar consumption in the whole season may drop to 277 lt in 2025-26.

Rising jaggery offtake

While many experts attribute the stagnant or falling sugar consumption in India to growing health consciousness among the public, influenced by social media to a large extent, some others have said that sugar is getting replaced by jaggery in many cases.

The government had last year amended the Sugar (Control) Order and the Sugarcane (Control) Order by including ‘Khandsari’ units (with a capacity of more than 500 TCD) under the purview of regulations, though it is yet to be effectively implemented. Under the law, these units are also supposed to file monthly returns, pay the same rate for sugarcane to farmers as sugar mills pay, as well as allotted area from where they have to purchase sugarcane.

There are over 370 khandsari units with a total capacity of about 95,000 tonnes (cane) crushed per day (TCD) in the country. Out of these, an estimated 66 units have a capacity of more than 500 TCD, each and only those units are covered under the amended Order.

Published on April 21, 2026