Birgunj Sugar Factory was considered as an important industry among those established under government efforts and ownership. Birganj Sugar Factory is one of the few examples of government-owned industries slowly becoming sick after the political changes of 2046.

King Mahendra laid the foundation stone of the Birgunj sugar factory, which was established as a gift by the then Soviet Union in 2021, in 2019. The said factory was established as per Companies Act, 2021 . The factory produced the most 2 lakh 2 thousand 750 quintals of sugar in 2047/048 . 23 lakh 9 thousand 548 quintals of sugarcane sold by the farmers were produced in that amount of sugar . But three years later, when it reached 050/051, sugar production had dropped to 85,000 quintals. At that time, the factory burned only 925,000 quintals of sugarcane.

In 2049/050, while the authorized capital was 150 million, the issued capital reached 8.83 million and the paid-up capital reached 7.52 million . In 2048/049 sugarcane was cultivated on 13 thousand bigha of land. At that time, nearly 16,000 farmers produced sugarcane and sold it to the factory. But at one time, sugarcane was produced only in 9 thousand 136 bighas . In the year 2022/2023, only 5 thousand 998 bigha of sugarcane was produced.

At that time, the decline in sugarcane cultivation, which was considered the most important for sugar production, was considered to be the main reason for the decline of the factory. The main reason for the decrease in sugarcane production was that the farmers did not receive payment on time. Stakeholders said that the production of the factory has decreased due to the fact that the sugarcane delivered to the factory is not paid on time, only the farmers can deliver the sugarcane to the factory on time, but ordinary farmers have to wait for a long time, political access and interference are increasing.

Even though the production is decreasing, there is no reduction in the number of employees, and some of them said that the factory has collapsed. In the year 2048/049, when sugar production was the highest, 1,386 workers were employed, although the production decreased, the number of workers was not significantly reduced. This increased the cost of sugar production. Although the demand for sugar in the country is increasing, the future of the factory was questioned when the proper reason for the decrease in production was not found. 

In this way, the government decided to privatize the declining sugar factory in the 50s and to close it in February 2056 . Although the meeting of the Council of Ministers on February 16 decided to close the factory, it was not decided how to manage it. The land owned by it is being used by government agencies including special economic zones, courts, treasury and accounting control offices. Some of the land has been registered by the government in the name of the office run by the factory.

The locals are still demanding to operate the factory. But in the era of open marketing, government officials say that the government's decision to operate the factory again is conceivable. In addition, the farmers have done very little to cultivate sugarcane, and the problem of not getting money from the sale of sugarcane is serious. Locals say that the open border with India will also affect the production and sale of sugar.