Ratings agency ICRA expects continued government support to the sugar sector due to surplus availability in the market.
It expects the support in the form of an increase in the MSP price, continuation of export policy and remunerative pricing for ethanol.
The availability of sugar in the domestic market is expected to be around 41.5 million MT, given bumper production in sugar year 2021 (SY2021), on back of already high opening stocks.
"The continued government support for the sugar industry remains critical for supporting the profitability of the sugar companies and curtailing any significant increase in the cane dues going forward, given the continuing sugar surplus scenario," the ratings agency said in a statement.
"Government support in the form of subsidies for sugar exports, creation of buffer stock and continued support with MSP for sugar would be critical going forward."
Additionally, ICRA noted that support for the ethanol manufacture in the form of price support to ethanol, especially those manufactured from "B molasses and sugarcane juice" and the interest subvention of loans for augmentation of distillery capacities, are likely to support the industry during times of over-supply.