New Delhi: The government on Friday said it is incorrect to attribute the recent increase in sugar prices to diversion of sugar for ethanol production, as the share of sugar diverted for this purpose has declined from around 12 per cent in 2022-23 to around 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 is closely monitoring the situation and has taken a series of measures to ensure adequate availability of sugar and stable prices for consumers.
Sugar prices have increased in recent weeks, 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 statement said.
Sugar production during the current season is expected to be around 306 lakh metric tonnes (LMT), compared to the initial estimate of around 343 LMT by sugarcane-growing states.
Also, production has been affected by Red Rot and Top Borer disease in sugarcane, as well as waterlogging caused by excess rainfall.
“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 tightening of sugar supplies is a global phenomenon and is not limited to India.
The global sugar deficit for 2026-27 is estimated at around 33 LMT. Concerns over weather conditions have further affected the global outlook.
As a result, international sugar prices have risen sharply from $474 per tonne on June 30, 2026, to $552 per tonne on 20 August 2026 — an increase of over 16 per cent in less than two months, said the statement.
India normally produces around 320-340 LMT of sugar annually, against domestic consumption of around 280-290 LMT. In years of surplus production, excess stocks block the funds of sugar mills and can delay payments to sugarcane farmers.
Diversion of excess sugar towards ethanol has helped address this structural problem and improved 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 noted.
The improved financial position of sugar mills has also reduced their dependence on government support.
While around Rs 14,600 crore of subsidy was provided to the sugar industry between 2014 and 2021, no such subsidy has been announced since 2021-22.
At the same time, sugar prices for consumers have remained broadly stable over the longer term, increasing by only around 3 per cent annually between August 2024 and July 2026, said the statement.
Notably, a stock limit of 400 tonnes has been imposed on sugar dealers across the country from 1 August to 30 November 2026. From September 1, bulk consumers will not be permitted to hold sugar stocks exceeding 15 days of consumption.
(IANS)
