The government on Friday said it was incorrect to attribute the recent rise in sugar prices to the diversion of sugar for ethanol production, noting that the share of sugar used for ethanol has declined from around 12 per cent in 2022-23 to about 9 per cent in 2025-26.
Moreover, nearly three-fourths of the ethanol produced in the country now comes from grains, particularly maize, the Ministry of Consumer Affairs, Food and Public Distribution said in a statement.
The government said it was closely monitoring the situation and had taken a series of measures to ensure adequate availability of sugar and maintain price stability for consumers.
Sugar prices have risen in recent weeks, increasing from Rs 48.18 per kg on July 20 to Rs 55.70 per kg on August 20.
“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,” the ministry said.
Sugar production in the current season is expected to be around 306 lakh metric tonnes (LMT), lower than the initial estimate of about 343 LMT made by sugarcane-growing states.
Production has also been affected by Red Rot and Top Borer diseases in sugarcane, as well as waterlogging caused by excess rainfall, the statement said.
“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,” the ministry said.
The government added that tightening sugar supplies was a global phenomenon and not limited to India. The global sugar deficit for 2026-27 is estimated at around 33 LMT, while concerns over weather conditions have further affected the global outlook.
International sugar prices have risen from $474 per tonne on June 30, 2026, to $552 per tonne on August 20, 2026, an increase of more than 16 per cent in less than two months, according to the statement.
India normally produces around 320-340 LMT of sugar annually against domestic consumption of about 280-290 LMT. During years of surplus production, excess stocks can block the funds of sugar mills and delay payments to sugarcane farmers, the government said.
It said the diversion of surplus sugar towards ethanol production had helped address this structural issue and improve the financial health of sugar mills.
“The results are visible. As on 20 August 2026, 97 per cent of sugarcane dues for the 2025-26 sugar season have already been paid to farmers,” the government said.
The improved financial position of sugar mills has also reduced their dependence on government support. While around Rs 14,600 crore in subsidies was provided to the sugar industry between 2014 and 2021, no such subsidy has been announced since 2021-22.
At the same time, retail sugar prices have remained broadly stable over the longer term, rising by around 3 per cent annually between August 2024 and July 2026, according to the statement.
To curb excessive stocking and ensure adequate supplies, the government has imposed a stock limit of 400 tonnes on sugar dealers across the country from August 1 to November 30, 2026. From September 1, bulk consumers will not be permitted to hold sugar stocks exceeding 15 days of consumption.
(With inputs from IANS)
