Not ethanol, but low output, festive demand behind sugar price hike: Centre

The Indian government clarified on Friday that the recent increase in sugar prices is not due to the diversion of sugar for ethanol production. Instead, the surge is attributed to lower domestic production, higher demand during the festive season, and crop damage caused by weather. Retail sugar prices increased from ₹48.18 per kg on July 20 to ₹58.20 per kg on August 21, as per data from the consumer affairs ministry's price portal.

In response to the price hike, the government is taking steps to prevent hoarding and allowing sugar imports for the first time in nearly a decade to meet domestic demand ahead of the festive season. The government's release revealed that the proportion of sugar diverted for ethanol production has decreased from around 12% in the 2022-23 season to approximately 9% in the 2025-26 season due to reduced output.

Currently, about three-quarters of India's ethanol is produced from grains, mainly maize, according to the government. Domestic sugar production for the current season is projected to be around 30.6 million tonnes, significantly lower than the initial estimate of 34.35 million tonnes. This decrease in production is attributed to sugarcane crops being affected by red rot and top borer diseases, as well as waterlogging from excessive rainfall.

Pallavi Singhal is a reporter based in New Delhi who specializes in agriculture, food policy, and the rural economy. She has been covering these topics for the Hindustan Times for the past four years, with a focus on farm policy, food inflation, procurement, agri-markets, and rural livelihoods. Prior to joining the Hindustan Times, she reported for Moneycontrol and Informist.