Mod 11: Sugar Industry of Bihar

Historical Legacy and Biofuel Integration:

Historically, Bihar served as a cornerstone of India's sugar production, hosting the country's first modern vacuum-pan sugar mills in the early 20th century across the fertile sugarcane belt of North Bihar. In recent years, the sector has transitioned from a traditional seasonal commodity business into an integrated agro-industrial energy complex. A pivotal regulatory milestone occurred under the National Biofuel Policy, 2018, which officially granted authorization for the direct production of ethanol utilizing sugarcane juice and B-heavy molasses. This policy shift significantly boosted mill profitability, curtailed cyclical sugar gluts, and established Bihar as an emerging hub for ethanol blending and green bio-energy.

Operational Performance and Crushing Season Dynamics:

• Crushing Benchmark (2023-24): During the 2023-24 crushing season, operational sugar mills in the state crushed 677.20 lakh quintals of sugarcane, disbursing aggregate cane payments amounting to Rs 2,188.42 crore directly to cane growers.
• Extended Operational Capacity: Between the consecutive seasons of 2021-22 and 2022-23, the average operational runtime per mill expanded substantially from 92 days to 119 days, reflecting enhanced operational efficiency, stable cane availability, and reduced machine idle time.
• Geographical Footprint: Bihar currently operates functional sugar mills across 10 designated locations: Bagaha, Harinagar, Narkatiaganj, Majhaulia, Gopalganj, Sidhwalia, Riga, Hasanpur, Lauriya, and Sugauli, heavily clustered within the West Champaran, East Champaran, Gopalganj, Sitamarhi, and Samastipur districts.

Recent Developments and Policy Updates (2025–2026):

• Procurement Milestones (2025-26 Season): Departmental monitoring reports indicate that up to April 9, 2026, the 10 operational sugar mills procured 572.66 lakh quintals of sugarcane, creating a total payment liability of Rs 2,137.83 crore.
• Expedited Arrear Settlement: Demonstrating unprecedented financial discipline, over 96% of total cane price dues for the 2025-26 season were settled and transferred directly to farmers' bank accounts by April 2026.
• Direct State Assistance Subsidy: In January 2026, the Government of Bihar sanctioned an outlay of Rs 70 crore for FY 2025-26 to fund a state assistance enhancement of Rs 10 per quintal in cane purchase prices, directly augmenting farm incomes.
• Upcoming Policy Formulation: High-level consultative proceedings were initiated in 2026 to formulate the Bihar Sugarcane Industry Investment Promotion Policy 2026, targeting the revival of closed legacy units, modern cogeneration expansion, and specialized agro-processing.

Exam View: Key Takeaways for Competitive Examinations:

• Number of Operational Mills: Exactly 10 sugar mills are functional in Bihar.
• Crushing Volumes: 677.20 lakh quintals crushed in 2023-24 (Rs 2,188.42 crore paid); 572.66 lakh quintals procured up to April 9 in 2025-26 (Rs 2,137.83 crore liability).
• Average Crushing Duration: Increased from 92 days (2021-22) to 119 days (2022-23).
• Policy Frameworks: National Biofuel Policy, 2018 enabled direct sugarcane juice-to-ethanol diversion; Bihar Sugarcane Industry Investment Promotion Policy 2026 is currently underway.
• State Financial Support: Rs 70 crore sanctioned in January 2026 for a Rs 10/quintal price assistance subsidy; 96% arrear settlement achieved by April 2026.