Sugar price rise not related to diversion for ethanol: Centre issues clarification

The Indian government has clarified that the recent surge in sugar prices is not due to diverting the crop for ethanol production. Instead, the government attributes the price increase to lower domestic output, heightened demand during the festive season, constrained global supplies, and hoarding by some industry players. The Ministry of Consumer Affairs, Food & Public Distribution stated that the government has taken measures to address the issue, such as imposing stock limits on traders and approving duty-free imports of raw sugar.

The proportion of sugar used for ethanol production has decreased to around 9% in the 2025-26 season, down from 12% in 2022-23. Nearly three-quarters of India's ethanol production now comes from grains, particularly maize. Domestic sugar production for the current season is estimated at about 30.6 million tonnes, lower than the initial estimate of 34.3 million tonnes.

The shortfall is attributed to diseases affecting sugarcane crops and excess rainfall causing waterlogging. Despite concerns over global sugar supplies, the government believes the available domestic sugar is sufficient to meet domestic demand until the next crushing season in October. The government has defended its ethanol program, stating it has helped manage sugar industry surpluses and improve payments to sugarcane farmers.