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FRP/SAP vs frozen sugar MSP
What it is
The Centre sets a Fair and Remunerative Price mills must pay for cane; several states impose a higher State Advised Price on political rather than recovery-linked grounds. Sugar's own Minimum Selling Price has been frozen at Rs 31/kg since 2019
Production cost for 2025-26 is estimated near Rs 41.7/kg, so the input is indexed upward while the output price is not
Impact on industries
- The defining structural distortion of Indian sugar - cane cost rises by administrative decision while the selling price floor has not moved in over six years
- SAP is not tied to sugar recovery, so a mill pays the same inflated cane price regardless of how much sugar the cane actually yields
- Industry bodies have sought MSP of Rs 40-41/kg and warn the sector cannot sustain the gap; a Rs 100/tonne FRP rise for 2026-27 came without any MSP revision
- Ethanol pricing has become the effective substitute for MSP relief, since it is revised more readily and gives mills a second realisation