The Ministry of Consumer Affairs, Food and Public Distribution has issued an Order amending the Sugarcane (Control) Order, 1966, to introduce a mechanism for the reinstatement of derecognized Industrial Entrepreneur Memorandums (IEMs) for sugar factories.
The new rules, called the Sugarcane (Control) Amendment Order, 2025, come into force immediately upon their publication on October 16, 2025. The new clause 6F permits a one-time review for the reinstatement of a derecognized IEM on a case-to-case basis, subject to specific financial and temporal conditions for the project proponent:
Financial and Regulatory Mandates
The Central Government may reinstate the IEM with the condition that the project proponent submit a fresh performance guarantee, particularly if the original guarantee required under sub-clause (2) of clause 6B was forfeited or has expired.
For regularizing any expired period of the IEM beyond seven years (as per clause 6C), an additional bank guarantee of rupees fifty lakh per year must be submitted. The relaxation granted for the COVID-19 period (March 1, 2020, to February 28, 2022) will continue to apply.
Any extension granted for implementing the reinstated IEM requires the furnishing of an additional bank guarantee of rupees fifty lakh for each year of extension sought.
Timeline and Extension Limits
The Order sets strict maximum limits for completing effective steps and commencing commercial production:
Extension for Effective Steps: The validity period of the reinstated IEM may be extended for a maximum of two years, not exceeding one year at a time, for completing the “effective steps” of the project. Further extension beyond this two-year period is permissible only upon completion of these effective steps.
Extension for Commercial Production: After the effective steps are completed and regularized, a maximum extension of two years for the commencement of commercial production shall be allowed, not exceeding one year at a time. There shall be no further extension beyond this two-year limit.
Non-Compliance and Final Authority
If the application is approved and the IEM is reinstated, the concerned person must adhere to all provisions of the Sugarcane (Control) Order, 1966, including the minimum distance requirements, unless otherwise modified in the reinstatement order.
If commercial production does not commence within any extended period of one year, the additional bank guarantee of rupees fifty lakh for that year shall be forfeited. Failure to commence production within all extended periods will result in the forfeiture of the bank guarantee furnished under sub-clause (2) of clause 6B as well.
The application may be rejected if the evidence provided by the project proponent is deemed insufficient or the circumstances do not justify reinstatement. All extensions are subject to consultation with the concerned State Government and the Department of Legal Affairs.