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How to Start a Sugar Mill in India

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Overview: Sugar Mill in India

Sugar can be made from sugarcane, sugar beets, or any other sugar-containing crop. Sugarcane, on the other hand, is the primary source of sugar in India. After the cotton textile sector, this is currently India's second-largest agro-based industry. There is a total capital investment of Rs. 1,250 crore in this business, which employs 2.86 lakh people. In addition, this industry benefits 2.50 million sugarcane growers. Sugar production in India has a long history. The sugar business is a significant agro-based industry that has an impact on the rural livelihoods of over 50 million sugarcane farmers and around 5 lakh sugar mill workers. After Brazil, India is the world's second-largest producer of sugar and the world's largest consumer. The Indian sugar business is crucial since it serves the world's largest domestic market while also providing employment to 50 million farmers and their families. It is India's second-largest agro-based sector.

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The sugar business in India has a unique role in the country's economic and social fabric. It is particularly important for the development of the rural economy.

Increased sugarcane yields, rising consumer demand for sugar, and rising sugar recovery rates are predicted to drive future growth in India's sugar sector. The sugar business in India has grown in recent years as a result of an increase in the number of sugar mills in the country as well as an increase in sugarcane yield. The industry's rapid expansion is mostly due to rising sugar demand from consumers and the institutional sector, as well as increased spending on food and drinks. From FY2010 to FY2015, the sugar market grew at a CAGR of 5% in terms of revenue. By 2018, the sugar sector is predicted to increase at a rate of %, increasing its value to INR lakh crore. Because of rising sugarcane yields and falling sugar prices, India's sugar market will increase at a reasonable rate. In the 2018-19 crop marketing year, which begins in October next year, the Indian sugar industry has already begun to talk about a record sugar production of over 29-30 million tonnes.

The annual output of the Indian sugar sector is currently valued at around Rs.80, 000 crores. As of July 31, 2017, the country had 732 sugar factories installed, with the crushing capacity to generate roughly 339 lakh MT of sugar. Private sector and cooperative sector units are fairly evenly dispersed in terms of capacity. 

After textiles, the sugar industry is India's second-largest rural-based agro-sector. The sugar business has seen an uptick in recent years as a result of lower sugar costs as a result of the substantial rise in crude oil prices. A sugar mill is also an environmentally favorable facility because it generates renewable energy from its co-product bagasse and alcohol from molasses. In India, a sugar mill is categorized as part of the medium to large scale segment. The sugar industry in India is extremely important. First and foremost, it caters to the world's largest domestic market, as well as 50 million farmers and their families. For financiers, a sugar processing factory is also a very profitable and commercial enterprise option. This is, nevertheless, a cash-based enterprise. It necessitates a significant initial commitment as well as strategic growth.

Process of Starting a Sugar Mill Business in India

Market Potential of Sugar Mill Business in India

Sugar has become one of the most important food commodities consumed worldwide, particularly in urban areas. Given the current demand for sugar on the domestic market, future sugar claims are expected to rise significantly.

Sugar is also a key ingredient in a variety of processed food industries. In addition, the product has a strong demand in the export market. Indonesia, China, the European Union, the United States, the United Arab Emirates, Bangladesh, and others are big sugar importers.

Investment Required To Start a Sugar Mill Business in India

Naturally, the project cost is determined by the anticipated manufacturing output. In this industry, there are two key investment portions. Fixed capital investment and working capital investment are the two types of investments. Land and construction, obtaining plant and equipment, registration, licensing, permissions, and other early expenses are typically included in the fixed cost. Expenses for purchasing raw materials, staffing, utilities, transportation, and distribution are all included in working capital.

A sugar mill with a processing capacity of 2,500 tonnes will cost between 40 and 50 crores in Indian rupees. You must also budget for land, housing, construction, working capital, and other expenses. For planning a sugar mill in India, the total speculation will be at least 125 crores. However, depending on your financial resources, you can consider starting a small sugar mill. In addition, India offers a variety of financing options. However, you must meet the requirements to borrow money from a bank.

Business Plan Guide to Start a Sugar Mill Business

You must have a business report or a project strategy in hand when establishing this firm. It's a good idea to get your business off to a good start with the help of a professional. Additionally, attempt to get as much information as possible regarding the sugar industry. In general, you'll need to look into the unique requirements for space, water, power, and people, among other things. Furthermore, you must calculate the business scale based on your investment capacity and risk-taking aptitude.

Business Plan Guide

License, Registration, and Permission Are Required To Start a Sugar Mill Business in India

You must do the registration for the business first. It is sensible to select the right form of the organization as per the investment and management design. And plan for the registration by ROC in India. After that, you should get different types of licenses and permissions to start the factory from the Government agencies. Currently, GST registration is mandatory and must be done within a few days of registering your business.

Sugarcane is covered under the ECA Act (Essential Commodities Act) due to its perishable nature and the need for instruction on cane supply and value. Additionally, if you are considering export, you must even obtain the certifications. And here also, you have to take assistance from a professional.

Things to Remember!

As this is a cash-oriented business, it is essential to make every decision precisely. First of all, you must set up the unit close to the sugar-producing region. So, you can easily obtain sugar cane from farmers or growers. Moreover, the space requirement of the plant is determined by plant capacity. You must secure the land as per your business plan. Check the power and water supply provision. Even a mini sugar mill needs an adequate source of water source for its functioning.

Sugar Subsidy

The Central Government reimbursed the participating State Governments/UT Administrations at a rate of $18.50 every kilogramme of sugar provided. According to the 2001 census, the plan covered the whole BPL population of the country, as well as the entire population of the North Eastern States, special category states, hilly states, and island territories. The National Food Security Act of 2013 (NFSA) is now in effect in all 36 states and territories. There is no defined category of BPL under the NFSA, however recipients of the Antyodaya Anna Yojana (AAY) are clearly identifiable. The Government of India has evaluated the Sugar Subsidy Scheme and determined that it is critical to ensure that the poorest of the poor, i.e. AAY families, have access to sugar as a source of energy in their diet. As a result, the Central Government decided in May 2017 that the present sugar distribution system via PDS could be maintained if the following conditions were met: 

  • The existing subsidised sugar supply plan through PDS may be continued for a limited number of AAY families. Each family will receive 1 kilogramme of sugar every month.
  • For the AAY population, the current amount of subsidy of Rs. 18.50 per kg provided by the Central Government to States/UTs for sugar distribution under PDS may be maintained. Over and beyond the retail issue price of Rs. 13.50 per kilogramme, the States/UTs may continue to pass on any additional expenses such as shipping, handling, and dealers' fee to the beneficiary or bear it themselves.

(Revised rules for reimbursement of sugar subsidy to States/UTs for distribution of sugar under the PDS for AAY families have also been released as a result of the foregoing decision)

Licenses Required for Setting up A Sugar Mill 

You must first complete the business registration process. It is prudent to choose the appropriate organisational structure based on the investment and management strategy. Also, make preparations for ROC registration in India. After that, you'll need to obtain several types of licences and permissions from government bodies in order to establish the factory. GST registration is currently required and must be completed within a few days after registering your firm.

Because of its perishable nature and the necessity for guidance on cane supply and value, sugarcane is included by the ECA Act (Essential Commodities Act). Furthermore, if you intend to export, you must secure the necessary approvals. You'll need to enlist the help of an expert here as well.

  • Business Registration
  • FSSAI License
  • GST Registration

Business Registration

In order to start a sugar mill business in India, each potential owner must first register his or her company. Furthermore, the Sole Proprietorship Firm is the best business structure for starting a Basic Mill. However, the finest type of business format for starting a sugar manufacturing company in India is a Private Limited Company Registration.

FSSAI License

A sugar Mill business is classified as a food business in India. As a result, the owner must get an FSSAI License or FSSAI Certificate from India's Food Safety and Standards Authority.

GST Registration

GST stands for goods and service tax, introduced in India on 1st July 2017 and replaced around 15 other cascading taxes levied by the Central and State governments. Under GST, goods and services are taxed at different rates as per the categories defined by the Indian Government. Various tax slabs are 0%, 5%, 12% ,18% and 28%. There is a special rate of 0.25% on rough precious and semi-precious stones and 3% on gold. In addition to this, a CESS of 22% on top of 28% GST applies to luxury items like aerated drinks, luxury cars, and tobacco products. 

GST replaced other indirect taxes and is thus set to dramatically reshape the country's 2.274 trillion-dollar economy. GST registration is compulsory for all businesses involved in the buying/selling of products or providing services or both within India.

  • The Government has examined the list of industries that are still subject to compulsory licencing and has decided to remove sugar from the list of businesses that are subject to compulsory licencing under the Industries (Development and Regulation) Act, 1951. However, under the Sugarcane Control Order, 1966, a minimum distance of 15 kilometres would be maintained between an existing sugar mill and a new mill in order to discourage unhealthy competition among sugar mills for sugarcane procurement.
  • Entrepreneurs who wish to benefit from the de-licensing of the sugar industry must file an Industrial Entrepreneur Memorandum (IEM) with the Ministry of Industry's Secretariat of Industrial Assistance, as required for all de-licensed industries under the Press Note dated August 2, 1991, as amended from time to time.
  • Those who have received a Letter(s) of Intent (LOI) to manufacture sugar do not need to file an initial IEM. In such circumstances, the LOI holder must only file Part "B" of the IEM against the LOI given to them after commercial production begins. Entrepreneurs may, however, file an initial IEM (in lieu of the LOI/ Industrial License they already have) if they like, if any variation from the LOI/ Industrial License's requirements and restrictions is planned.

Read Our Blog: Industrial License and Registration in India

Norms for Sugar Mill in India

  • A sugar factory's maximum water use per tonne of crushed cane cannot exceed 2 cubic metres.
  • The firm must ensure that all effluents are collected and treated on-site before being discharged by installing scientifically designed treatment units with suitable capacity and biological treatment systems for effluent treatment to the State Pollution Control Board's standards. Wherever methane recovery plants are used, the methane gas produced is not released to the atmosphere, but rather used to generate electricity in the industry.
  • Treated effluent that meets the required requirements must always be used for irrigation and not dumped into any stream, river, or surface water body. The sugar factory must have enough land to ensure that all treated effluents are used for agriculture.
  • The application of treated effluent must be carefully monitored to prevent land floods or groundwater contamination. The State Pollution Control Board must guarantee that the factory produces a report on the geophysical characteristics and absorption capability of the soil before approving the use of treated wastewater for irrigation. The plant must install a suitable number of observation bores/test wells in and around the irrigated area to monitor groundwater quality.
  • Chimneys of the required height and other air pollution control equipment like fly-ash arresters as prescribed by the State Pollution Control Board shall be provided by the factory.
  • Bagasse shall be collected and stored properly by the factory to avoid fugitive emissions.
  • The factory shall ensure that the noise levels are within the stipulated limits and shall conduct periodic monitoring of noise levels at designated locations at specified intervals.
  • Press mud generated can be sold without further treatment. However, in case it is not sold it shall be collected, composted within the factory under the supervision of the factory's Scientists/Engineers before disposing it off. Leachate from the press mud shall be collected and treated and it shall not be allowed to soak down the earth nor create aesthetic nuisance nor contaminate the groundwater. Composting pits shall be impervious. The necessary Certificate and the suitability of the composted press mud for agriculture shall be produced to the State Pollution Control Board.
  • Lime sludge shall be collected and disposed off by the factory scientifically as approved by the State Pollution Control Board.
  • Ash from the boilers shall be collected and disposed of by the factory scientifically as approved by the State Pollution Control Board.
  • The factory shall install water meters to measure the water consumed for different purposes as per the Water (Prevention and Control of Pollution) Cess Act, 1977, as amended, and pay water cess.
  • Beginning in 1993, the factory must submit an Environmental Statement Report to the State Pollution Control Board on or before the 30th day of September for the fiscal year ending March 31st in the approved format.
  • All tanks used for effluent storage and treatment must be impermeable by lining them with appropriate cement concrete/stone masonry/stone slab lining and leak-proof joints on the bottom and sides. Around such tanks, observation bores with pipes must be installed and monitored for leaking.
  • The factory shall store the molasses generated inadequately sized steel tanks provided with roof cover.
  • The factory shall upgrade the pollution control systems as and when new technologies become available.
  • The factory shall ensure continuous and effective operation and maintenance of pollution control systems by employing qualified Environmental Engineers/Scientists.
  • The factory shall ensure continuous and uninterrupted power supply to see that the pollution control systems function uninterruptedly. A separate energy meter shall be provided for pollution control systems.
  • A fully equipped laboratory shall be established by the factory with appropriate equipment to monitor the performance of pollution control systems and to test the effluents, emissions and soil for pollution-related parameters.
  • Every new factory, as well as those that are proposed to be expanded, must submit an Environmental Impact Assessment Report and an Environmental Management Plan to the State Pollution Control Board and the Department of Ecology and Environment, respectively, in order to obtain prior approval and environmental clearance.
  • The Occupier will not be permitted to operate the plant unless he has obtained consents under the Water (Prevention and Control of Pollution) Act of 1974 and the Air (Prevention and Control of Pollution) Act of 1981, as well as clearance under the Environment (Protection) Act of 1986. Action will be done by writing to the relevant departments to halt supplies of electricity, water, and other utilities.
Private Limited Company Registration

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Business Plan

A business plan is an engraved sketch of your business's prospect, a document that describes the step to step process on what a business owner plan to do and how to execute the plan.

Startup India Registration

Startups are becoming very popular in India. In order to develop the Indian economy and attract talented entrepreneurs, the Government of India, under the leadership of PM Narendra Modi, has started and promoted the Startup India initiative to recognize and promote startups.

This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not corpseed, and have not been evaluated by corpseed for accuracy, completeness, or changes in the law.

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Author
Surbhit Sharma
I have worked for many internet blog pages and news portals. currently, I am working as a content writer for Corpseed Pvt. Ltd. I like to write blogs and articles in the field of different services.