Government Revises Six-Decade-Old Sugarcane Act, Solicits Public Feedback by May 20

Centre Proposes Sweeping Regulatory Framework for Sugarcane Industry

The Centre has proposed replacing the 1966 Sugarcane Control Order with a new regulatory framework that integrates ethanol production, digital compliance, and a formal factory approval regime under a single law for the first time. The Union Food Ministry has released a draft Sugarcane (Control) Order 2026, which seeks public comments by May 20.

The draft order keeps the skeleton of the old law intact, retaining rules such as Fair and Remunerative Price, cane movement controls, a 14-day payment deadline, and a 15 per cent annual interest on delayed payments. However, the new architecture is suited to an industry that has undergone significant changes since the Nehru era.

One of the most significant departures from the 1966 order is the explicit integration of ethanol into the sugarcane regulatory framework. The draft expands the definition of a sugar factory to cover ethanol production from sugarcane juice, syrup, sugar, and molasses. A concrete conversion formula has been introduced, treating 600 litres of ethanol as equivalent to one tonne of sugar for production calculation purposes.

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Ethanol-only units that do not crush cane on their own premises are exempted from the performance bank guarantee requirement, a deliberate policy nudge to grow standalone ethanol capacity without loosening controls on integrated sugar-cum-ethanol mills.

The draft introduces clauses 6A through 6G, which include a formal IEM-based approval process for new factories, minimum distance rules, performance bank guarantees raised to Rs 2 crore, and hard deadlines for both "effective steps" and commercial production.

The draft also creates a factory lifecycle regime, covering transfer restrictions before commercial production, reinstatement of derecognised projects, and automatic derecognition if a factory remains closed for seven consecutive sugar seasons. The by-product explanation is tightened to recognize imputed value from value-added uses such as ethanol, bio-fertilizer, and power generation, while excluding bagasse used only for boiler operation in the main sugar factory.

Each factory will be assigned a plant name and plant code for tracking, and reporting can now be submitted digitally, including through APIs. Search and seizure provisions have been updated to align with the Bharatiya Nagarik Suraksha Sanhita, 2023.

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Comparison of Proposed Changes

India is the world's second-largest sugar producer after Brazil.