The Centre said the recent sugar price hike is due to lower production, festive demand, and weather damage, not ethanol diversion. The government is taking steps like stock limits and duty-free imports to ensure availability and price stability.
The Centre said that 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.
According to the Ministry of Consumer Affairs, Food & Public Distribution, the Centre is closely monitoring market developments and has initiated a series of regulatory and supply-side measures to maintain availability and price stability for consumers. The government has acted to curb sugar price rise and ensure adequate availability during the festive season following an upward movement in domestic retail prices from Rs 48.18 per kg on July 20 to Rs 55.70 per kg on August 20.
Causes of Price Increase
"It is incorrect to attribute the recent increase in sugar prices to diversion of sugar for ethanol production," the Ministry noted, explaining that the share of sugar diverted for ethanol declined from around 12 per cent in 2022-23 to around 9 per cent in 2025-26, while nearly three-fourths of the country's ethanol output now originates 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," the Ministry stated.
Domestic production for the current season is projected at 306 LMT against an initial estimate of 343 LMT, impacted by Red Rot and Top Borer disease alongside waterlogging from excess rainfall. Despite the lower output, the Ministry confirmed that adequate stocks remain available to cover domestic demand until the new crushing season commences in October.
The pressure on supplies reflects a broader international trend. The global sugar deficit for 2026-27 is estimated at 33 LMT due to adverse weather patterns, driving international prices up from USD 474 per tonne on June 30 to USD 552 per tonne on August 20, a rise of over 16 per cent in under two months.
Government Measures to Stabilise Prices
To counter domestic speculation, a stock limit of 400 tonnes remains in effect for dealers until November 30, while bulk consumers face a 15-day holding cap starting September 1. Joint Central and State teams are conducting physical stock verifications at mills to prevent artificial scarcity.
"As a precautionary measure, the Government has decided to permit duty-free import of 10 LMT of raw sugar to further augment domestic availability," the Ministry said. Mills have been advised to advance crushing to October 15, which is expected to lift October output from the typical 3-4 LMT to more than 10 LMT.
The Ministry highlighted that structural reforms through ethanol diversion improved mill liquidity and eliminated subsidy dependence since 2021-22, enabling mills to clear 97 per cent of farmer dues for the 2025-26 season by August 20, while retail prices rose at a modest 3 per cent annual rate between August 2024 and July 2026. "The Government remains committed to protecting the interests of both consumers and sugarcane farmers," the Ministry added, affirming continued surveillance over stocks and trade practices to prevent unwarranted price increases. (ANI)
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