Overview of the Sugar Industry in India
The sugar industry is a crucial agro-based industry in India. We are the second-largest producer of sugar and its largest consumer. Sugar production is one of the key employers and an important industry in the country. It impacts the rural livelihood of about five crore cane farmers and around 5 lakh workers who are employed in sugar mills. There are 732 sugar factories in the country, with a capacity to produce 339 lakh MT of sugar annually. This capacity is distributed almost equally between private sector units and cooperative sector units, the two big players dominating sugar production in the country. The production capacity of sugar mills can be anywhere in the range of 2500 TCD-5000 TCD and expanding beyond 10000 TCD. The stakeholders include the Central and State government, sugar mill owners and the workers, sugarcane farmers and associations of the sugar mill owners. The cane price that is announced by the Centre is decided on the recommendations of the CACP after consultation with the State Governments and associations of the sugar industry. The Directorate of Sugar & Vegetable Oils is responsible for implementing policies relating to sugar and edible oil, particularly their availability and monitoring of their prices, as the powers of cane area allotment have been delegated to the State Government. Any proposed new sugar factory has to commence operation within 5 years from the date of filing of the Industrial Entrepreneur Memorandum (IEM), with some exceptions.
Responsibilities of the Entrepreneur/Applicant of regarding Sugar Mill operation
- The entrepreneur must submit a quarterly progress report in the prescribed format to the Central government with regard to the implementation of their IEM.
- After completion of the construction of the sugar industry, the entrepreneur has to take up a trial crushing and obtain a certificate from the Central Excise for having started sugar production.
- The applicant has to submit a proposal to the office of the Cane Commissioner for allotment of Plant Code and Short Name. Also, a certificate from the Central Excise with details about trial crushing. The office of the Cane Commissioner will forward a letter to the Deputy Commissioner of the respective district to verify the authenticity of the proposal and verify the location of the chimney in the factory.
- After the Cane Area Allocation Order from State is obtained, the entrepreneur has to promote and develop cane cultivation in the area allotted.
Licences and Documents needed to set up Sugar Mill
Today the Indian sugar industry's annual output is approximately Rs.80,000 crores. The Sugar industry has do follow some regulatory checks and measures installed by the government to regulate such a big industry. These checks are in the form of a series of licences and permits that are as follows.
Business Registration: Registering a sugar mill business with the appropriate authorities is mandatory under the law. This helps the owner become eligible for certain benefits given by the government from time to time.
Consent NOC:A sugar mill that wants to operate or set up an industrial plant must acquire Consent NOCs from their respective SPCB/PCC. This NOC is given in two stages, i.e. Consent to Establish (CTE) and Consent to Operate (CTO). To set up a mill, one must comply with the provision of the Environment (Protection) Act, 1986, The Water Act and the Air Act. Documents required for this NOC are
- Duly filled Application Form
- layout plan with a roadmap
- Detailed Project Report
- Details of the manufacturing process
- Details of installed pollution control and waste management measures.
- list of machinery along with capital costs like land, building
- water balance, source of water, and its required quantity
- Land ownership documents such as rent /lease agreement
- Industry Registration Documents.
- Consent fee (as applicable)
- Balanced Sheet Certified by a CA
- Lab report of the trade effluents
- any permission required from the State Government, for instance, environmental clearance
- Any document mentioned in the application form
FSSAI Licence: A Sugar industry will also need to get the required trade and food business licenses from the FSSAI, as sugar production is recognised as an agro-processing industry. The documentation required to obtain a FSSAI licence are
- Photo ID
- List of proposed food articles
- A duly filled Form-B by the applicant.
- Partnership Deed/ Certificate of Incorporation (COI)/ Memorandum of Association(MOA)/ Articles of Association (AOA)
- Lease or rental agreement to prove land ownership.
- Food safety management system (FSMS) plan
- Supporting dossiers (if any, such as NOC of Panchayat/ Municipality, health NOC
- List of raw materials suppliers
- Form IX
- Water test report through a certified NABL lab.
- Import-export code (aka IEC) granted by DGFT
- List of machines and equipment
- List of directors and Partners
Permission to set up sugar mill from the Cane Commissioner
An application for the issuance of a licence to set up a sugar mill must be submitted to the office of Cane Commissioner & Director of Sugar of the state along with the documents like
- Company incorporation certificate (if a registered company)
- Memorandum of association (MOA) andArticle of Association (AOA)
- RTC copy/sale deed copy of the land
- Details of cane availability (village-wise information) certified by the Joint Director of Agriculture of the concerned revenue district.
- District map highlighting the location of the factory
- Pillar Erection and Erection Sketch.
- Sketch showing the nearby sugar factory's location
- Any previous experience of the applicant in sugar mill sector, including Co- generation Unit
- Source of Income for the establishment of the Sugar Industry
- Details of any prior application for the establishment of the Sugar Industry
- Financial Background of the applicant
- IT returns of the applicant submitted for the last three years
Additional Licences and Permits required to setup aSugar Industry
- Trade License from the local authorities
- Udyog Aadhaar Registration (if applicable)
- Trade Mark Registration
- GST registration
- AGMARK (if required)
- IEC code (if the applicant wishes to export the finished product)
- BIS certification
- CGWA NOC (for water abstraction)
Steps in the establishment of New Sugar Industry
Application for obtaining permission to set up a sugar mill must be submitted to the Office of the Cane Commissioner /Director of Sugar of the respective State.After submission of the application, some key reports are to be obtained from the concerned District Deputy Commissioner by the Office of the Cane Commissioner /Director of Sugar.
Step 1: Distance Certificate from Survey of India that the applicant must forward to the Government of India to issuean Industrial Entrepreneur Memorandum(IEM). Industrial undertakings are exempted from Industrial Licensing requirements under The Industries (Development and Regulations) ACT 951. They are required to submit information relating to the set up of industries, known as IEM.The applicant has to file an application to the Central Government requesting for issuance of IEM.
Step 2: After filing the IEM, the applicant has to submit a performance guarantee to the Chief Director(Sugar), Department of Food & Public Distribution, Ministry of Consumer Affairs, Food & Public Distribution, within thirty days of filing the IEMfor ensuring the implementation of the IEM within the stipulated time
Step 3:After submission of the Bank Guarantee, the government will issue an acceptance order to the applicant stating that their sugar mill has been entered in the record as a "New Sugar Factory".
Step 4:After obtaining the acceptance Order, the applicant needs to apply to the concerned State’s Udyog Mitra and obtain in-principle clearance for setting up a new sugar factory.
Step 5:After obtaining clearance from Udyog Mitra, the entrepreneur has to identify the villages for Cane Area Allotment and submit the proposal to the Office of the Cane Commissioner and Director of Sugar with details like the name of the village, the distance between the village and the proposed sugar mill and a map highlighting the proposed villages and nearby sugar mills.
Step 6:After obtaining the report about the current cane availability and future development and the distance between the proposed new sugar mill and the nearby existing sugar factories, the Office of Cane Commissioner and Director of Sugar will meet the entrepreneur of the proposed new sugar factory and the existing neighbouring sugar factories along with the Joint Director, Agriculture Department of the concerned District to discuss specific agendas. Based on the brief report (meeting proceedings), the Office of the Cane Commissioner and Director of Sugar have to recommend to the state government the allotment of cane area to the proposed new sugar factory.
After obtaining the IEM and Acceptance Order from the Government of India and, in principle, clearance for their project in Udyog Mitra, the entrepreneur may start the sugar mill's operation.
Production of Ethanol by the Sugar Industry and Financial Assistance by the government
The government notified a new scheme in 2019 for extending financial assistance to sugar mills to enhance and augment ethanol production capacity. The Central government has started giving permission to install ethanol pumps; all sugar factories can also start an ethanol pump on their premises. Under the scheme Government would bear a cost of Rs.2790 crore through interest subvention for extending an indicative loan of approximately Rs.12900 crore to the sugar mills for the augmentation of their ethanol-producing capacity.
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