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Priya Singh
New Delhi: The government has stepped up measures to control the recent rise in sugar prices and ensure adequate availability during the upcoming festive season.
According to the government, the average sugar price increased from ₹48.18 per kg on July 20 to ₹55.70 per kg on August 20. The rise has been attributed to lower-than-expected domestic production, higher festive-season demand, weather-related crop damage, tightening global supplies and speculation and hoarding in some parts of the industry.
Sugar production for the current season is estimated at around 306 lakh tonnes (LMT), against the initial estimate of nearly 343 LMT by sugarcane-growing states.
The government said sugarcane crops have been affected by diseases such as Red Rot and Top Borer, along with waterlogging caused by excess rainfall.
Despite the lower production estimate, the government said existing stocks are sufficient to meet domestic demand until the new crushing season begins in October.
The government said the recent increase in sugar prices cannot be linked to diversion of sugar for ethanol production.
The share of sugar diverted for ethanol has declined from around 12% in 2022-23 to about 9% in 2025-26. At the same time, nearly three-fourths of ethanol production now comes from grains, particularly maize.
The government also said the ethanol programme has helped sugar mills manage surplus production and improve their financial position.
India generally produces around 320-340 LMT of sugar annually, while domestic consumption is estimated at 280-290 LMT.
During surplus years, excess sugar can tie up the working capital of mills and affect timely payments to sugarcane farmers. The government said diversion of surplus sugar towards ethanol has helped address this issue.
As of August 20, 2026, around 97% of sugarcane dues for the 2025-26 sugar season had been paid to farmers.
The government also noted that sugar mills have become less dependent on government support. While around ₹14,600 crore in subsidies was provided to the industry between 2014 and 2021, no such subsidy has been announced since 2021-22.
The price pressure is not limited to the domestic market. The government estimates a global sugar deficit of around 33 LMT for 2026-27.
International sugar prices increased from $474 per tonne on June 30 to $552 per tonne on August 20, a rise of more than 16% in less than two months.
To prevent artificial scarcity and strengthen domestic availability, the government has introduced several measures.
A 400-tonne stock limit has been imposed on sugar dealers across the country from August 1 to November 30, 2026.
From September 1, bulk consumers will also be restricted from holding sugar stocks exceeding 15 days of consumption.
Central and state government teams are carrying out physical verification of sugar stocks at mills to check possible hoarding.
The government has additionally decided to allow duty-free import of 10 LMT of raw sugar as a precautionary measure to increase domestic availability.
States and sugar mills have been advised to begin the new crushing season from October 15.
The government expects this early start to increase October sugar production from the usual 3-4 LMT to more than 10 LMT, helping improve availability during the festive period.
The government said it will continue monitoring sugar prices, stocks and market practices while taking steps to protect both consumers and sugarcane farmers, prevent hoarding and ensure timely payment of farmers’ dues.
