The Indian sugar industry comprises about 20% of sugar mills and 15% of sugar production of the world. It is the second largest agro-processing industry in the country with total employed capital of Rs. 50,000 cr and annual turnover of Rs. 25,000 cr. It plays a key role in rural development. Over 7.5% of rural population is engaged in sugar cultivation, harvesting and ancillary activities and provides direct employment to five lakh skilled and unskilled workers. It contributes about Rs. 2,500 cr annually to the Center and State exchequers in the form of taxes (ISMA.2004). The industry has remained a focal point for socio-economic development in the rural areas by mobilizing rural resources, generating employment and income and creating transport and communication facilities (GOI, 2002). However, the industry is facing a number of problems, such as obsolete technologies being employed, low capacity utilization, poor financial condition, and erratic supply of sugar cane.

Sugar industry plays a vital role in the development of the rural economy in Tamil Nadu. It serves as one of the important agencies in the rural development. It is a major industry, which directly helps to improve the economic conditions of farmers in the rural areas. It has helped in the development of a network of good roads in rural areas. The state of Tamil Nadu is one of the leading sugar producers in India. The sugar produced by the factories located in this area is about 10% of India's total sugar production. The income generated from sugar cane sales exceeds Rs. 100 cr per year.

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