Empowering farmers via a resurgent sugar sector
FRP aims to address the aspirations of the farmers while ensuring competitiveness of the Indian sugar industry. The FRP is the benchmark price below which no sugar factory can purchase sugarcane. Therefore, it is like Minimum Support Price but here procurement is carried out by the sugar factories, and not by the government.
The sugar industry in India has had a chequered history and has emerged as a robust sector only in recent years. In 8 years leading up 2020-21, the government extended financial assistance of more than Rs 18,000 crores to bring sugar sector out of financial crises so that farmers' payments could be released by mills promptly. In recent years, targeted interventions from the Centre, acumen of the sugar industry and propitious global factors have led to a turnaround of the sugar sector.
The health of sugar sector can be gauged from the fact that since 2021-22, no budgetary support has been given to sugar mills except under interest subvention scheme for ethanol projects (under which Rs 494 crores have been disbursed till June 30, 2023). Enhanced levels of capital expenditure in the sector for modernisation and diversification have led to additional investment of more than Rs 30,000 crore in the sector in the last 6 years and generation of more than 50,000 direct and indirect employment opportunities for rural youth. Trends in stock prices of listed companies are a reliable indicator of not only the present health of the sector but also of its future prospects.
It is seen that market capitalisation of the top 10 listed sugar companies (based on their sugarcane crushing capacity) has more than doubled in last 4 years. The turnaround of the sugar sector can be credited to three broad set of factors. The
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