Sugar’s price spike, govt says ethanol not at fault

Sugar prices have surged in recent weeks, but the Indian government has dismissed ethanol production as the cause, citing lower-than-anticipated domestic output, festive-season demand, weather-related crop damage, tightening global supplies, and speculation or hoarding as the primary factors. Sugar prices jumped from ₹48.18 per kg on July 20, 2026, to ₹55.70 per kg on August 20, 2026.

The government is actively monitoring the situation and has introduced measures to maintain a stable supply and prices for consumers. The Ministry of Consumer Affairs, Food & Public Distribution stated that the current rise is due to a combination of factors, excluding diversion of sugar for ethanol production. Despite the lower-than-expected domestic production, sufficient sugar stocks are available in the country to fulfill domestic demand until the next crushing season begins in October.

The global tightening of sugar supplies is not unique to India. Within a span of two months, domestic sugar prices have surged by nearly 40%. The government recently permitted duty-free imports of 1 million tonnes of raw sugar until October 31 to alleviate the record-high prices before the upcoming festive season. This move marked a significant policy shift, as the government had earlier approved 1.5 million tonnes for export and later increased it to 2 million tonnes.

However, due to tight domestic stocks, only 800,000 tonnes were exported, raising concerns about the estimated sugar production and stock for the 2025-26 season. Adverse weather conditions, particularly in Brazil, the world's largest sugar producer, have also worsened the supply outlook, contributing to the sugar price rally.