Sugar prices have risen on the back of lower-than-expected domestic production, increased festive-season demand, weather-related crop damage, tightening global supplies, and speculation and hoarding by sections of the industry, the the government says, ruling out diversion of sugar for ethanol production as a cause. It also announced a series of measures to curb hoarding and augment supplies.
Retail sugar prices rose from ₹48.18 per kg on July 20 to ₹55.70 per kg on 20 August 2026. The government said the share of sugar diverted for ethanol had, in fact, declined from around 12% in 2022-23 to about 9% in 2025-26, while nearly three-fourths of the country’s ethanol is now produced from grains, particularly maize.
Sugar output in the current season is estimated at around 306 lakh metric tons (LMT), against an initial estimate of about 343 LMT by sugarcane-growing states. Production has been hit by red rot and top borer disease, as well as waterlogging caused by excess rainfall. However, the government said adequate stocks were available to meet domestic demand until the new crushing season begins in October.
Global supply pressures have also contributed to the rise. The global sugar deficit for 2026-27 is estimated at around 33 LMT, while international prices climbed from $474 per tonne on June 30 to $552 per tonne on August 20, an increase of over 16%.
To stabilize prices, the government has imposed a 400-ton stock limit on dealers until November 30. From September 1, bulk consumers will be barred from holding stocks exceeding 15 days of consumption. Joint central and state teams are physically verifying mill stocks, while duty-free imports of 10 LMT of raw sugar have been permitted. States and mills have also been advised to begin crushing from October 15, potentially raising October output from the usual 3-4 LMT to over 10 LMT.
The ethanol program, meanwhile, has helped manage surplus production, strengthen mill finances and improve farmer payments, it said. As of 20 August, 97% of 2025-26 sugarcane dues had been paid. Government subsidy to the sector, which totaled about ₹14,600 crore between 2014 and 2021, has not been announced since 2021-22. Consumer sugar prices had also risen by only around 3% annually between August 2024 and July 2026.
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Naresh Khanna – 10 February 2025
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