Ø Government Acts to Curb Sugar Price
Rise, Ensure Adequate Availability During Festive Season
·
Sugar
prices:
Domestic sugar prices increased from ₹48.18/kg
on 20 July 2026 to ₹55.70/kg on 20 August 2026.
·
Ethanol
not the cause: The
Government said the recent price rise cannot
be attributed to diversion of sugar for ethanol.
·
Lower
ethanol diversion: Sugar
diverted for ethanol declined from around 12% in 2022-23 to 9% in 2025-26.
·
Grain-based
ethanol:
Nearly three-fourths of
India's ethanol production now comes from grains, particularly
maize.
·
Reasons
for price rise:
Lower-than-expected sugar production, higher festive-season demand,
weather-related crop damage, tightening global supplies, and speculation/hoarding.
·
Production
shortfall:
Current-season sugar production is estimated at around 306 LMT, against the
initial estimate of 343
LMT.
·
Crop
damage:
Production has been affected by Red
Rot, Top Borer disease and waterlogging caused by excess
rainfall.
·
Domestic
stocks adequate:
Despite lower production, the Government says sufficient stocks are available to meet domestic demand
until the new crushing season in October.
·
Global
shortage: The
global sugar deficit for 2026-27
is estimated at around 33 LMT.
·
International
prices:
Global sugar prices rose from $474/tonne
on 30 June to $552/tonne on 20 August 2026, an increase of over 16%.
·
Ethanol
programme:
Diversion of surplus sugar to ethanol has helped improve the financial health
of sugar mills and facilitate timely payments to farmers.
·
Farmer
payments: 97% of sugarcane dues for the 2025-26
season had been paid as of 20 August 2026.
·
Reduced
Government support: Sugar
industry subsidies of around ₹14,600
crore were provided during 2014-2021, while no such subsidy has
been announced since 2021-22.
·
Stock
limit: A 400-tonne stock limit
has been imposed on sugar dealers from 1
August to 30 November 2026.
·
Bulk
consumers: From 1 September 2026, bulk
consumers cannot hold sugar stocks exceeding 15 days of consumption.
·
Anti-hoarding
checks:
Central and State teams are conducting physical
verification of sugar stocks at mills.
·
Duty-free
imports:
Government will permit duty-free
import of 10 LMT of raw sugar to augment domestic supplies.
·
Earlier
crushing:
States and mills have been advised to begin crushing from 15 October 2026.
·
Expected
supply boost: Early
crushing could increase October production from the usual 3-4 LMT to more than 10 LMT.
·
Overall
objective: The
measures aim to stabilise
consumer prices, prevent hoarding, ensure adequate sugar availability and
protect timely payments to sugarcane farmers.
Sugar prices have increased in recent
weeks, from ₹48.18 per kg on 20 July 2026 to ₹55.70 per kg on 20 August
2026. The Government is closely monitoring the situation and has taken a series
of measures to ensure adequate availability of sugar and stable prices for consumers.
Rise in sugar prices cannot be attributed
to ethanol
It is incorrect to attribute the recent
increase in sugar prices to diversion of sugar for ethanol production.
In fact, the share of sugar diverted
for ethanol has declined from around 12% in 2022-23 to around 9% in 2025-26.
Moreover, nearly three-fourths of the ethanol produced in the country now comes
from grains, particularly maize.
The present increase in sugar prices is
due to a combination of factors, including lower-than-expected domestic production,
increased demand ahead of the festive season, weather-related damage to the sugarcane
crop, tightening global sugar supplies and speculation and hoarding by some sections
of the industry.
Sugar production lower than initial estimates
Sugar production during the current season
is expected to be around 306 LMT, compared to the initial estimate of around
343 LMT by sugarcane-growing States.
Production has been affected by Red Rot
and Top Borer disease in sugarcane, as well as waterlogging caused by excess rainfall.
Despite the lower than estimated production,
adequate sugar stocks are available in the country to meet domestic demand until
the new crushing season begins in October.
Sugar prices are rising globally too
The tightening of sugar supplies is a
global phenomenon and is not limited to India.
The global sugar deficit for 2026-27 is
estimated at around 33 LMT. Concerns over weather conditions have further
affected the global outlook.
As a result, international sugar prices
have risen sharply from $474 per tonne on 30 June 2026 to $552 per tonne on 20
August 2026 — an increase of over 16% in less than two months.
Ethanol programme has helped farmers and
strengthened sugar mills
India normally produces around 320-340
LMT of sugar annually, against domestic consumption of around 280-290 LMT.
In years of surplus production, excess stocks block the funds of sugar mills and
can delay payments to sugarcane farmers.
Diversion of excess sugar towards ethanol
has helped address this structural problem and improved the financial health of
sugar mills.
The results are visible. As on 20 August
2026, 97% of sugarcane dues for the 2025-26 sugar season have already been paid
to farmers.
The improved financial position of sugar
mills has also reduced their dependence on Government support. While around ₹14,600
crore of subsidy was provided to the sugar industry between 2014 and 2021, no such
subsidy has been announced since 2021-22.
At the same time, sugar prices for consumers
have remained broadly stable over the longer term, increasing by only around 3%
annually between August 2024 and July 2026.
Government acting against hoarding and
to increase supply
The Government has observed that speculation
and hoarding by some sugar mills and traders have also contributed to the recent
price increase. Several steps have therefore been taken:
1. A stock limit of 400 tonnes has
been imposed on sugar dealers across the country from 1 August to 30 November 2026.
2. From 1 September, bulk consumers will
not be permitted to hold sugar stocks exceeding 15 days of consumption.
3. Joint teams of Central and State Government
officials are carrying out physical verification of sugar stocks at mills
to check hoarding and artificial scarcity.
4. As a precautionary measure, the Government
has decided to permit duty-free import of 10 LMT of raw sugar to further
augment domestic availability.
5. States and sugar mills have been advised
to begin crushing from 15 October 2026. This is expected to raise October
sugar production from the usual 3-4 LMT to more than 10 LMT, further improving
availability during the festive season.
The Government remains committed to protecting
the interests of both consumers and sugarcane farmers. It will continue to closely
monitor sugar stocks, prices and market practices and take all necessary measures
to prevent hoarding and unwarranted price increases while ensuring timely payment
of dues to farmers.