Progress of the Sugar Industry: Sugar had been manufactured in India by indigenous processes from early limes. The sugar so manufactured was not so refined but had a large demand in European markets. In the 1840’s India supplied 1/4 of the sugar needs of England. However, the industry was not run on very sound lines. The unit of manufacture was very small while the methods used were both primitive and wasteful. Sugar was manufactured not directly from cane juice but ‘Gur’ and, what is more, hardly any machinery was used.
Understandably, when beet-sugar started arriving from Europe, refining in Indian factories became unprofitable and a real blow was struck at the industry. Between 1895—1900, over 180 of these small establishments in the U.P. alone had to close down. The earliest attempts to start sugar mills were made first by Dutch planters in 1841—42 and then by British Planters. Both ended in failure. It was in 1903 that sugar mills on modern lines were successfully started in Bihar. Although foreign capital dominated the industry, Indian capital also began to be invested, especially in the U.P. In 1906, there were two Indian factories in Kanpur.
In the face of foreign competition and absence of any govt., assistance, progress was slow. The war of 1914—18 gave some encouragement as imports were reduced and import duties were high raised to 25% in 1922. Sugar prices continued to rule high until 1924 when world supply once again began to overtake demand and low-price imports started flooding India. In 1925, the duty on superior sugar was raised to Rs.4.50 per cwt. which, at the then prices, amounted to about 30% ad valorem. The Depression brought about a headlong fall in prices so that even the higher rate of Rs. 61- cwt. was unable to check the growth of imports.