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Indian Sugar Industry Introduction

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Sugar is one of the oldest commodities in the world and traces its origin in 4th

century AD in India and China. In those days sugar was manufactured only from
sugarcane. But both countries lost their initiatives to the European, American and
Oceanic countries, as the eighteenth century witnessed the development of new
technology to manufacture sugar from sugar beet. However, India is presently a
dominant player in the global sugar industry along with Brazil in terms of production.
Given the growing sugar production and the structural changes witnessed in Indian

sugar industry, India is all set continue its domination at the global level. Indian
sugar industry is highly fragmented with organized and unorganized players. The
unorganized players mainly produce Gur and Khandari, the less refined forms of sugar.
The government had a controlling grip over the industry, which has slowly yet steadily
given way to liberalization.

The production sugarcane is cyclical in nature. Hence the sugar production is


also cyclical as it depends on the sugarcane production in the country. As the industry is
a fragmented one, even leading players do not control more than 4 percent market in
India. However, the situation is changing and players off late are striving to increase
their market share either by acquiring smaller mills or by going for green field capacity
additions.

Indian sugar industry can be broadly classified in to two sub sectors, the
organized sector i.e. sugar factories and the unorganized sector i.e. manufacturers of
traditional sweeteners like gur and khandsari. The latter is considered to be a rural
industry and enjoys much greater freedom than sugar mills.

The production of traditional sweeteners gur and khandsari is quite substantial.


Though the trends indicate a progressive shift from traditional sweeteners to white
sugar over the years, they still account for about 37% of total sweetener consumption in
India.
Since the sugar industry in the country uses only sugarcane as an in input, sugar
companies have been established in large cane growing states like Uttar Pradesh,
Maharashtra, Tamil Nadu, Karnataka, Punjab and Gujarat. Uttar Pradesh leads the tally
by contributing 24% of the countries total sugar production and Maharashtra stands
next with 20% contribution.

The farmers co-operatives own and operate the largest chunk of the industry's
total capacity. They are concentrated primarily in Maharashtra and eastern Uttar
Pradesh. The largest number of sugar companies in the private sector are located in
southern India, in the states of Tamil Nadu, Andhra Pradesh and Karnataka.

Out of 453 sugar mills in the country, 252 are in the co-operative sector, 134 are
in the private sector and 67 are in the public sector. Besides 136 units in the private
sector are in various stages of implementation. A Few such units are under
implementation in the co-operative sector as well. But no new units have been proposed
in the public sector.

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