Sugar prices in India have reportedly jumped nearly 40% over the past two months, with retailers selling the soluble carbohydrate at ₹65 per kg on Thursday. The rise comes as demand surges ahead of the upcoming festive season, the BBC reported. E-commerce platforms such as Blinkit, Zepto, Swiggy and Instamart have introduced caps on sugar purchases in several markets, with some retailers allowing customers to purchase only 3-5 kg of sugar at a time.
The Opposition has blamed the sharp rise in sugar prices on the diversion of sugarcane towards ethanol production, continuing its criticism of the government’s ethanol blending programme. Farmers’ groups, however, have alleged that large traders artificially pushed up prices ahead of the festive season. The government, meanwhile, has stated that it is closely monitoring the situation and attributed the increase to a combination of factors.
The government has attributed the increase to five major factors.
Lower domestic production: Sugar production in the current season is expected to be around 30.6 million tonnes, below the initial estimate of about 34.3 million tonnes made by sugarcane-growing states.
The government attributed the shortfall to Red Rot and Top Borer diseases affecting sugarcane, as well as waterlogging caused by excess rainfall.
Festive-season demand: Demand for sugar is expected to strengthen ahead of the festive season, putting additional pressure on prices.
Weather-related crop damage: Excess rainfall and waterlogging have affected sugarcane output, contributing to the lower production estimate.
Tighter global supplies: International sugar prices have also risen amid tighter global supplies. The government estimates a global sugar deficit of about 3.3 million tonnes in 2026-27. International sugar prices increased by more than 16% to $552 a tonne on 20 August from $474 a tonne on 30 June.
Speculation and hoarding: The government also cited speculation and hoarding by some sections of the industry as factors contributing to the price increase.
As per a note from Crisil Intelligence dated 25 August, the amount of sugar being channelled towards ethanol production has increased substantially over the past five years. Sugar diverted for ethanol rose from just 0.8 million tonnes (mt) in the 2019-20 sugar season to more than 3 mt in 2025-26, representing an almost four-fold increase. This reduction in available sugar, coupled with a production deficit and higher sugarcane costs resulting from increased support prices for farmers, has contributed to the sharp rise in sugar prices.
The sugar industry, however, has disputed this assessment. It pointed out that nearly 75% of ethanol production now comes from feedstocks such as maize and surplus rice, while sugar-based sources account for only about 25%. The Indian Sugar and Bio-energy Manufacturers’ Association (ISMA) said in a statement on 24 August that the ethanol blending programme has also improved the financial health of sugar mills, enabling them to make timely payments to sugarcane farmers.
In a bid to ease prices, the Centre has permitted imports of 10 lakh tonnes of raw sugar until 31 October. It has also introduced stock limits for dealers and large bulk buyers, including beverage manufacturers. Meanwhile, sugar exports had already been prohibited several months earlier, news agency PTI reported.
Indian Sugar Mills Association (ISMA) estimates that India’s net sugar production, after accounting for the quantity diverted towards ethanol, will stand at around 279 lakh tonnes in the 2025-26 marketing season, which runs from October to September. The country entered the season with an opening stock of 50 lakh tonnes.
India’s annual sugar consumption is estimated at 280-285 lakh tonnes. Before the government imposed the export ban, around 8 lakh tonnes of sugar had been shipped overseas.
ISMA expects the country to end the marketing year in September with around 35 lakh tonnes of sugar in stock.
