Khandsari: The Unlicensed Sugar Industry

Imagine an entire parallel sugar industry operating alongside the large, licensed mills covered throughout this page, using simpler mechanical crushing rollers and open-pan boiling rather than the vacuum pan crystallisation technology organised mills rely on, producing a coarser, less refined product than white crystal sugar, yet collectively absorbing a genuinely enormous 45-50 percent of India's total sugarcane crop, a scale that rivals the organised mill sector itself.

Khandsari differs from jaggery, covered elsewhere on this site, in a meaningful technical way, khandsari does go through a crystallisation step, producing a granular product closer to sugar than jaggery's solid block form, but it uses simpler, smaller-scale equipment than organised mills, and critically, has historically operated with lighter licensing requirements than large sugar mills, which need government approval to expand crushing capacity, making khandsari production a genuinely more accessible entry point for smaller-scale operators.

This sector directly employs roughly 25 lakh people, a workforce comparable in scale to the migrant cane-cutting labour and organised mill employment covered elsewhere on this site, spread across small, often family-run crushing and boiling units that were originally concentrated in Uttar Pradesh but have since spread to cane-growing regions nationwide, giving rural cane farmers a genuine alternative buyer beyond the organised mills bound by Fair and Remunerative Price obligations, covered elsewhere on this site.

Khandsari's massive absorption of cane creates a real, if under-discussed, complication for interpreting national sugar statistics, production and export figures reported by ISMA and the government, covered elsewhere on this site, primarily track organised mill output, meaning close to half of India's actual sugarcane harvest flows through channels, khandsari and jaggery combined, that fall largely outside the headline sugar production numbers most policy and market commentary actually discusses.