New Delhi, August 26: The government on Wednesday said India has sufficient sugar stocks to meet domestic demand until the next crushing season begins in October, rejecting concerns that ethanol production has created a shortage or driven up sugar prices.
Retail sugar prices have risen sharply in recent weeks, increasing from Rs 48.18 per kg on July 20 to Rs 55.70 per kg on August 20, a rise of about 15.6 per cent in one month. However, the government said consumer prices had increased by only around 3 per cent annually between August 2024 and July 2026, indicating that the latest increase was largely linked to short-term supply and market conditions.
The government also disputed claims that sugar diversion for ethanol production was contributing to the price increase. It said the proportion of sugar diverted towards ethanol had declined from around 12 per cent in 2022-23 to about 9 per cent in 2025-26. Nearly three-fourths of ethanol production now comes from grains, particularly maize.
Lower-than-expected domestic sugar output, stronger demand ahead of the festive season and weather-related crop damage have contributed to the recent price increase, according to the government factsheet. It also cited Red Rot and Top Borer diseases and waterlogging caused by excess rainfall as factors affecting sugarcane production.
Sugar output for the current season is now expected at around 306 lakh metric tonnes (LMT), against an initial estimate of approximately 343 LMT. Despite the shortfall, the government maintained that available stocks are sufficient to meet domestic requirements before the new crushing season starts in October.
Global market conditions have also added pressure. The government estimated a global sugar deficit of around 33 lakh MT for 2026-27. International sugar prices rose from $474 per tonne on June 30, 2026, to $552 per tonne on August 20, an increase of more than 16 per cent in less than two months.
The government further attributed the domestic price movement to speculation and hoarding by some sections of the industry, alongside tightening international supplies and higher global prices.
It said the ethanol programme has also helped sugarcane farmers and strengthened the financial position of sugar mills. India typically produces around 300-340 lakh MT of sugar annually, while domestic consumption stands at about 280-290 lakh MT.
During surplus years, excess sugar stocks can lock up mill funds and delay payments to farmers. The government said diverting surplus sugar towards ethanol has helped address this structural issue. Sugarcane cultivation has expanded from 49.27 lakh hectares in 2015-16 to 58.87 lakh hectares in 2025-26.
As of August 20, 2026, 97 per cent of sugarcane dues for the 2025-26 season had been paid to farmers, while improved mill finances had reduced their dependence on government support.
