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By:

Rajendra Joshi

3 December 2024 at 9:20:26 am

Sugar industry strains as traders reap profits

Gap between ex-mill prices, retail rates raised questions Kolhapur: The Indian sugar industry is caught in a deepening crisis, with sugar mills struggling to secure remunerative prices for their produce even as traders and middlemen appear to be making substantial profits. While sugar mills are receiving between Rs 4,600 and Rs 4,800 per quintal through recent sale tenders, retail prices have remained as high as Rs 58 per kg. The widening gap between ex-mill prices and retail rates has...

Sugar industry strains as traders reap profits

Gap between ex-mill prices, retail rates raised questions Kolhapur: The Indian sugar industry is caught in a deepening crisis, with sugar mills struggling to secure remunerative prices for their produce even as traders and middlemen appear to be making substantial profits. While sugar mills are receiving between Rs 4,600 and Rs 4,800 per quintal through recent sale tenders, retail prices have remained as high as Rs 58 per kg. The widening gap between ex-mill prices and retail rates has raised serious questions about the role of intermediaries and the effectiveness of the Centre’s efforts to contain sugar prices. The margins available to traders and intermediaries have reportedly crossed 20 per cent, leaving sugar millers perplexed. At a time when both sugarcane growers and mill operators are under financial pressure, the trading chain appears to be benefiting disproportionately. The Centre must examine this growing disparity and take corrective measures to prevent speculative profiteering. Retail sugar prices began rising sharply in August, touching nearly Rs 70 per kg in some markets. The escalation added to inflationary pressures and caused concern among consumers, particularly ahead of the festive season. In response, the Centre introduced a series of measures to improve domestic availability and moderate prices. These included permitting duty-free sugar imports, initially until October 31, a deadline subsequently extended to December 31. The government also directed sugar mills to commence the crushing season from October 15 and tightened monitoring of sugar stocks. In another significant intervention, it modified the ethanol policy, restricting the diversion of sugarcane juice, sugar syrup and B-heavy molasses for ethanol production. Following these measures, sugar mills began witnessing a decline in the prices offered through their sale tenders. Recent transactions have fetched between Rs 4,600 and Rs 4,800 per quintal. Going by the conventional relationship between ex-mill prices and retail rates, sugar should ideally have been available to consumers at less than ₹50 per kg. However, retail prices continue to hover around Rs 58 per kg, pointing to a substantial disconnect between the mill gate and the consumer market. Traditionally, sugar retailing operated on relatively thin margins. Since sugar is an essential commodity, retailers often treated it as a low-margin product to attract customers who would subsequently purchase other household provisions. The margin was sometimes informally equated with the resale value of the empty 50-kg jute bags in which sugar was supplied. This was considered a nominal return for retailers. That traditional pricing mechanism, however, appears to have undergone a significant change. The widening gap between mill-level tender prices and retail rates has created considerable scope for intermediaries to extract higher margins. The critical question is whether the additional amount paid by consumers is reaching the sugar mills or remaining within the trading chain. The issue assumes particular significance in Maharashtra, where the sugarcane pricing dispute has intensified ahead of the new crushing season. Farmers’ organisations have been demanding a minimum price of Rs 5,500 per tonne for sugarcane. Millers, meanwhile, are preparing to agitate for a revision in the Fair and Remunerative Price (FRP) framework and the restoration of a more supportive ethanol policy. The Swabhimani Shetkari Sanghatana, led by Raju Shetti, has taken a firm position that sugar mills should not be allowed to commence operations until farmers receive an acceptable price for their cane. Shetti has also drawn the state government’s attention to the unusually high retail prices of sugar, questioning why consumers continue to pay more even as mills are forced to sell at relatively lower rates. The Centre’s sudden changes to the ethanol policy have further complicated the industry’s financial position. Ethanol production had emerged as an important revenue stream for sugar mills, enabling them to diversify operations, improve cash flows and enhance their capacity to pay farmers. Restrictions on the diversion of sugarcane-based raw materials have weakened this support at a critical juncture. The resulting contradiction is difficult to ignore: farmers are demanding better cane prices, millers are struggling with shrinking realisations and policy uncertainty, while intermediaries appear to be benefiting from the gap between wholesale and retail prices. The government cannot address the sugar crisis merely by regulating mill stocks, imports and ethanol diversion. It must also examine the entire supply chain, identify where the widening margins are accruing and ensure that the benefits of market interventions reach both sugarcane growers and consumers. With nearly Rs 2 lakh crore riding on the sugar economy, allowing intermediaries to thrive while the industry’s primary stakeholders struggle would be a serious policy failure.

Capital Grabs

Correspondent
Dec 1, 2025
3 min read

Born of bureaucratic logic in Delhi, the Chandigarh proposal has collided headlong with history and federal nerves in Punjab.

Punjab
Punjab

The Centre’s recent aborted attempt to pull Chandigarh under Article 240 has turned incendiary. The proposal on November 21 “to amend the Constitution to bring Chandigarh under Article 240” detonated like a depth charge beneath Punjab’s already choppy waters.


The reaction in Punjab was immediate and furious. Chief minister Bhagwant Mann accused the Centre of plotting to “snatch” Punjab’s capital. The Shiromani Akali Dal called it a direct assault on the state’s rights. The Congress demanded immediate withdrawal. Even the BJP’s Punjab unit, wary of electoral fallout ahead of 2027, rushed to distance itself. Within 48 hours the Union home ministry beat a retreat, promising consultations and shelving the bill for the winter session. But the episode has already revealed how fragile India’s federal equilibrium has become.


From Delhi’s point of view, the case is not entirely frivolous. Chandigarh is one of the last constitutional curiosities of post-1960s India: a Union Territory governed under Article 239, administered by the Punjab governor in an additional capacity, yet still governed largely by the laws of a long-vanished undivided Punjab. Shifting the city under Article 240 would align it with other legislature-less Union Territories, simplify service rules, and hand the Centre unequivocal regulatory authority.


There are security concerns behind the rationale as well. The present arrangement dates to 1984, when terrorism and President’s Rule in Punjab made coordination imperative. Four decades later the logic has inverted: a city that hosts two state capitals, sits astride sensitive border politics and houses strategic institutions is precisely the sort of place the Centre increasingly prefers to run directly rather than through layered federal intermediaries. The bitter turf war between Punjab and Haryana cadres, the erosion of the 60:40 officer ratio, and the shift to central service rules since 2022 already point to a de facto central enclave. The amendment would merely formalise what practice has been drifting towards.


Nor would Chandigarh be an exception. From the reorganisation of Jammu and Kashmir to the steady circumscription of Delhi’s elected government, India has been living through a quiet phase of constitutional recentralisation. In this wider mosaic, Chandigarh is just another tile.


Yet, this managerial logic from the Centre’s point of view feels like constitutional trespass for Punjab. Chandigarh is not merely an administrative unit but a historical consolation prize for Lahore, the city Sikhs lost at Partition. Built on land acquired from some 50 villages and inaugurated in 1953 as independent India’s first planned capital, it became a monument to survival and modernity. When Punjab was split in 1966 and Haryana carved out, Chandigarh was declared a temporary shared capital. That ‘temporary’ arrangement hardened into permanence. In 1970 Indira Gandhi’s government declared the city “should as a whole go to Punjab.” The Rajiv–Longowal Accord of 1985 reaffirmed it. Implementation was then quietly buried under territorial disputes and political fatigue.


Against that backdrop, Article 240 is a blunt constitutional instrument that allows the President to make regulations with the force of law, bypassing Parliament altogether. In practical terms, it would allow laws governing Chandigarh to be rewritten by executive notification. Even something as basic as the mayor’s tenure could, in theory, be altered by a file signed in North Block.


The timing only sharpened the provocation. Barely a month earlier, the Centre had interfered in Panjab University’s governance. Since 2022, Punjab has protested the steady sidelining of its officers from Chandigarh’s administration in favour of central and Haryana cadres.


Politicization of this episode has been predictably swift. Mann, once mocked for theatrics, now presents himself as Chandigarh’s defender. The Akalis seek to reclaim their vanished monopoly over Sikh political sentiment. The Congress waits patiently for the churn to weaken its rivals. The BJP, still scarred by the farm-law revolt, knows that even the perception of tampering with Punjab’s symbols is electoral poison.


The deeper issue, however, runs beyond party advantage. It is about how India now reconciles power and federalism. Chandigarh’s present governance, though improvised, has nonetheless worked for over 40 years. The reform it truly needs is not presidential fiat but local empowerment. 


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