Centre Proposes Changes to Sugarcane Control Order on Mill Distance and Payments

The Union government has floated a draft amendment to the Sugarcane (Control) Order, 1966, which regulates India’s sugarcane sector. The draft proposes changes related to mill location norms, payment mechanisms, and regulation of khandsari units.

Stakeholders have been invited to submit comments on the draft by May 20, 2026. The proposal comes at a time when sugarcane pricing and mill dues remain key policy concerns.

Proposed Minimum Distance Between Sugar Mills

The draft amendment proposes a minimum distance of 25 kilometres between two sugar mills. This provision is aimed at avoiding unhealthy competition for sugarcane and ensuring more balanced cane availability.

Several states, including Maharashtra, already enforce a similar distance norm. The Centre’s proposal seeks to introduce uniformity across states under the central order.

Regulation of Khandsari Units

The draft also proposes bringing khandsari units under tighter regulatory oversight. Khandsari, a traditional unrefined sugar derived from cane, currently operates with relatively fewer compliance requirements.

The amendment proposes making licences mandatory for khandsari units and subjecting them to regular inspections. It also requires khandsari units to pay sugarcane growers the fixed fair and remunerative price.

Sugarcane Usage and Sector Impact

According to estimates, around 31% of India’s annual sugarcane production of 435 million tonnes is used by gur, khandsari, and jaggery units. This highlights the significant role played by non-mill processing units in the sugarcane economy.

Bringing these units under stricter regulation could impact cane allocation and pricing dynamics. Some draft provisions already exist in the current order, while others require closer evaluation.

Payment Timelines and Interest Provisions

The draft strengthens provisions related to timely payment to farmers. It proposes that mills pay interest at 14% per annum if cane payments are delayed beyond the mandatory 14‑day period.

If dues remain unpaid at the end of the sugar year, mills would be required to deposit the amount with the district collector. The collector would disburse valid claims, after which any unclaimed amount would be credited to the State’s Consolidated Fund and used for sugarcane development.

Read More: Best Ethanol Stocks in India.

Conclusion

The draft amendment to the Sugarcane (Control) Order, 1966 seeks to address long‑standing issues related to mill spacing, farmer payments, and regulation of khandsari units. It introduces stricter enforcement mechanisms and clearer timelines for settlement of cane dues.

The proposal has been floated ahead of the Uttar Pradesh state elections scheduled for 2027, where sugarcane issues are politically significant. Stakeholder feedback over the coming weeks is expected to shape the final contours of the amended order.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.