The government on Tuesday approved a 3% hike in fair and remunerative price (FRP) of sugarcane to be paid to farmers by the mills for the 2026-27 sugar season (October-September) to Rs 365/quintal.

The approval by the Cabinet Committee on Economic Affairs (CCEA) is subject to base sugar recovery of 10.25%. The CCEA also approved payment of a premium of Rs 3.56/quintal for each 0.1% increase in sugar recovery above 10.25% and reduction in FRP of Rs 3.56/quintal for every 0.1% decline in recovery.

However, the Government has stated that there shall not be any deduction in case of sugar mills where recovery is below 9.5%. “Such farmers will get Rs 338.3/quintal for sugarcane in the ensuing sugar season 2026-27,” according to an official note.

“Increase in FRP will result in an additional income of over Rs 15,000 crore – Rs 20,000 crore, taking total cane payment to Rs 1.3 lakh crore in the upcoming season,” Deepak Ballani, director general, Indian Sugar Mills Association (ISMA) said.

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In the 2024-25 sugar season, out of cane dues payable of Rs 1.02 lakh crore, 99.5% have been paid to farmers. In the current season 2025-26, out of cane dues payable of Rs.1.12 lakh crore about Rs.99,961 crore cane dues or 88.6% have been paid to farmers as on April 20, 2026

The central government announces the FRP annually before the start of the sugarcane crushing season. It is the threshold price that mills are legally bound to pay to cane growers.

FRP of sugarcane is fixed on the basis of cost of production of all the major sugarcane producing states.

However, many state governments, including Uttar Pradesh and Tamil Nadu, have their own cane pricing policy and they announce their sugarcane rates, which are known as state advised price or SAP, which is over and above the FRP.

As the season comes to an end, the industry has again urged for an early revision of the Minimum Selling Price (MSP) of sugar, citing rising production costs and subdued ex-mill realisations putting pressure on mill cash flows and fueling cane payment arrears.

ISMA has urged for aligning the MSP of sugar and ethanol procurement prices with the revised FRP.

According to ISMA, the sugar production in the 2025-26 season has reached 27.52 million tonne (MT) by the end of April, 7% increase from 25.65 MT during the same period last year.

Milling activity has largely completed, with only five sugar factories still operational compared with 19 at the same point last year.

“The sugar sector impacts the livelihood of about 5 crore sugarcane farmers and their dependents and around 5 lakh workers directly employed in sugar mills, apart from those employed in various ancillary activities including farm labour and transportation,” according to an official statement.