Sugar is the second largest agro-based industry in India. The industry provides employment to about two million skilled and semi-skilled workers besides those who are employed in ancillary activities, mostly from rural areas. Though the industry contributes a lot to the socioeconomic development of the nation, it is plagued with a number of problems such as cyclical fluctuations, high support prices payable to farmers, lack of adequate working capital, partial decontrol and the uncertain export outlook. Despite the problems, the industry has good growth potential due to steady increase in sugar consumption, retail boom and diversification into areas such as power generation and production of ethanol. In addition to this, strong possibilities exist for counter trade, if the Government designs and develops sugar industry-oriented policies. With this background, an attempt has been made to examine the problems and prospects of sugar industry in India.

Sugar has been known to India for about 2000 years and there is ample evidence to show that India is the original home of sugarcane, and also of sugar manufacture. Sugar has been mentioned in the epics as one of the five Amritas i.e., celestial sweets. Nothing tastes so sweet as sugar. Even the English term sugar is a derivative of the Sanskrit word Sarkara. The word Shakkara was in vogue in Prakrit literature for sugar. Therefore, it is found to be mentioned in many languages with different names, varying in pronunciation though resemble in some way. It has been mentioned as Schakar in Persian, Sukkar in Arabic, Suigar in Assyrian, Azucar in Spanish and Portuguese, Zuchero in Italian, Sucre in French, Zucker in German and so on. Mention about sugarcane is found in the Atharva Veda in 5000 B.C. There is perhaps no earlier description of sugarcane than this in the hoary history of the world.

References of sugar are also found in the inscriptions of Manu and the treatises of Charaka and Susruta dealing with medicine. Its mention is made in the records of Megasthenese and Chanakya during the period 321-296 B.C. Alexander, the Great and his soldiers were the first foreigners (Europeans) to find sugarcane in India in 327 B.C. A Chinese encyclopedia in the middle of the 16th century mentioned that in India, the art of sugar making had reached such a high standard that the Chinese Emperor Taitsung (627-650 A.D.) sent his men to learn the method of sugarcane cultivation and also the manufacture of sugar. In fact, India is the birthplace of the manufacture of sugar from sugarcane juice1.