Sugar Price HIKED: Here's The Real Reason Behind Increase Price of Sugar; Read On

Sugar Price HIKED: Just before the festive season, sugar prices are shooting up in India. But the Centre says ethanol production isn't the reason. Here's the government's explanation for why your tea is getting costlier

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Sugar prices are soaring!

Just as the festive season is about to begin, sugar prices are rising sharply, causing worry for many households. People are speculating about the reasons, with many blaming ethanol production. However, the central government has clarified that this is not the case.

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Multiple factors behind the price hike

The government says several reasons are behind the sudden price rise. These include lower-than-expected production, a spike in demand due to festivals, crop damage from bad weather, a drop in global sugar supply, and hoarding by some unscrupulous traders.

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Government is keeping a close watch

The Ministry of Consumer Affairs, Food and Public Distribution has stated that it is closely monitoring the situation. The government has already taken several steps to ensure a steady supply of sugar for the public and to keep prices under control.

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Price jumped by over ₹8 in one month

Data shows that on July 20, the price of sugar was ₹48.18 per kg. This shot up to ₹55.70 by August 20. That's a price increase of more than ₹8 in just one month, prompting the government to take action.

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Ministry clears the air on ethanol

The ministry clarified, "Blaming the use of sugar for ethanol production for the price rise is wrong." It even provided data to show that ethanol production doesn't impact sugar prices. While about 12% of sugar was used for ethanol in 2022-23, this will drop to around 9% by 2025-26. Currently, nearly three-fourths of the country's ethanol comes from corn and other grains.

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The real reasons for the price hike

According to the ministry's statement, "The price rise is due to low production, increased festive demand, sugarcane crop damage, a global supply crisis, and hoarding by some groups." While the estimate for this season was 343 lakh metric tonnes, actual production might only reach 306 lakh metric tonnes.

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Why sugar production has fallen

The ministry has identified diseases like Red Rot and Top Borer, along with waterlogging in fields due to heavy rains, as the main reasons for lower production. However, it assured that there is enough sugar in stock to meet the country's needs until the new season begins in October.

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Global sugar supply is also tight

The international market is also facing a sugar shortage. It's estimated that due to bad weather, the global sugar deficit could be 33 lakh metric tonnes for 2026-27. As a result, the international price, which was $474 per tonne on June 30, jumped to $552 by August 20—a rise of over 16% in less than two months.

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Centre cracks down on hoarding

To stop hoarding in the domestic market, the government has set a stock limit of 400 tonnes for dealers until November 30. Also, from September 1, bulk buyers are banned from stocking sugar for more than 15 days. Joint teams from the Centre and states are inspecting sugar mills to check stock levels and prevent any artificial shortage.

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Govt may allow duty-free imports

The ministry added, "As a precautionary measure, the government has decided to allow duty-free import of 10 lakh metric tonnes of raw sugar to boost domestic supply." Sugar mills have also been advised to start crushing sugarcane by October 15. This is expected to push production beyond 10 lakh metric tonnes in October, compared to the usual 3-4 lakh metric tonnes.

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Ethanol policy has helped sugar mills

The ministry noted that structural reforms, like diverting sugar for ethanol production, have improved the financial health of mills and reduced their dependency on subsidies since 2021-22. This has helped mills clear 97% of their dues to farmers for the 2025-26 season by August 20. Meanwhile, between August 2024 and July 2026, retail sugar prices have only increased at an annual rate of 3%. The ministry concluded, "The government is committed to protecting the interests of both consumers and sugarcane farmers," and assured that it will continue to monitor stocks and trade to prevent any unreasonable price hikes.