New Delhi: The Government has stepped up measures to contain the recent rise in sugar prices and ensure adequate availability for consumers during the upcoming festive season. Sugar prices have increased from ₹48.18 per kg on July 20, 2026, to ₹55.70 per kg on August 20, 2026, prompting closer monitoring of stocks, market practices and supply conditions.
The Government has clarified that the recent increase in sugar prices cannot be attributed to diversion of sugar for ethanol production. The share of sugar diverted towards ethanol has declined from around 12% in 2022-23 to approximately 9% in 2025-26. At the same time, nearly three-fourths of ethanol production in the country now comes from grains, particularly maize. Officials said the current price rise is the result of several factors, including lower-than-expected domestic sugar production, higher festive-season demand, weather-related crop damage, tightening global supplies and speculation and hoarding by some industry participants.
Sugar production during the current season is estimated at around 306 lakh tonnes (LMT), significantly below the initial estimate of around 343 LMT made by sugarcane-growing States. Production has been affected by diseases such as Red Rot and Top Borer, along with waterlogging caused by excessive rainfall. Despite the shortfall, the Government has stated that domestic sugar stocks remain sufficient to meet consumption requirements until the new crushing season begins in October.
The pressure on prices is also linked to developments in international markets. Global sugar supplies are tightening, with the global sugar deficit for 2026-27 estimated at around 33 LMT. Concerns over weather conditions have further affected production expectations. International sugar prices have consequently risen from $474 per tonne on June 30, 2026, to $552 per tonne on August 20, representing an increase of more than 16% in less than two months.
The Government has also highlighted the role of the ethanol programme in strengthening the financial position of sugar mills and supporting timely payments to farmers. India generally produces around 320-340 LMT of sugar annually against domestic consumption of approximately 280-290 LMT. Diverting a portion of surplus sugar towards ethanol has helped reduce excess inventories, ease financial pressure on mills and improve their ability to pay sugarcane farmers. As of August 20, 97% of sugarcane dues for the 2025-26 season had been paid.
The improved financial health of sugar mills has also reduced their dependence on government support. While the sugar industry received around ₹14,600 crore in subsidies between 2014 and 2021, no such subsidy has been announced since 2021-22. Meanwhile, consumer sugar prices have remained relatively stable over the longer term, rising by only around 3% annually between August 2024 and July 2026.
To prevent hoarding and artificial scarcity, the Government has introduced a series of measures. A stock limit of 400 tonnes has been imposed on sugar dealers across the country from August 1 to November 30, 2026. From September 1, bulk consumers will not be allowed to maintain sugar inventories exceeding 15 days of consumption. Central and State Government teams are also conducting physical verification of sugar stocks at sugar mills to identify and prevent hoarding.
In addition, the Government has decided to permit duty-free import of 10 LMT of raw sugar as a precautionary measure to strengthen domestic availability. States and sugar mills have also been advised to commence crushing from October 15, 2026. This is expected to increase sugar production in October from the usual 3-4 LMT to more than 10 LMT, thereby improving supplies during the festive season.
The Government has reiterated that it will continue to closely monitor sugar stocks, prices and market practices. The measures are aimed at balancing the interests of consumers and sugarcane farmers by preventing unwarranted price increases and hoarding while ensuring adequate supplies and timely payment of dues to farmers.
