A bitter aftertaste hits India amid ethanol questions

India's sugar production for the current season is estimated at around 306 lakh tonnes, a decline of 11% from the initial estimate of 343 lakh tonnes, according to government data released on Friday. This shortfall, the government claims, is not due to increased ethanol production from sugar but rather a reduction in the sugar diverted for ethanol production, which has fallen from 12% in 2022-23 to about 9% in 2025-26.

Ethanol now accounts for about three-quarters of India's ethanol production, with the rest coming from grains. The government attributes the sugar output shortfall to excess rainfall in Maharashtra last October and disease outbreaks like Red Rot and Top Borer affecting sugarcane in Uttar Pradesh and Maharashtra. Sugar exports began in March, and were halted in early May when the government acknowledged the lower-than-expected production.

Meanwhile, global sugar supplies are also expected to face a 33 lakh tonne deficit in 2026-27 due to weather concerns. Despite the lower production estimate, officials anticipate that India's opening sugar stocks on October 1 will still be sufficient to meet domestic demand until new supplies arrive with the new crushing season.