Centre denies ethanol diversion is behind sugar price rise
India’s Food Ministry said sugar prices rose from ₹48.18/kg on July 20 to ₹55.70/kg on August 20, mainly due to lower production, higher demand, hoarding and tight global supplies—not ethanol diversion. The government has imposed stock limits, allowed 10 LMT duty-free raw sugar imports, and advised early crushing from October 15.
New Delhi: The Union Ministry of Consumer Affairs, Food and Public Distribution on Friday said it was closely monitoring the recent rise in sugar prices and dismissed suggestions that the increase was linked to diversion of sugarcane for ethanol production, according to a press release issued by the ministry, The Times of India reported.
The ministry said retail sugar prices had risen from Rs 48.18 per kg on July 20, 2026 to Rs 55.70 per kg on August 20, 2026, and that the government had taken a series of measures to ensure adequate availability and stable prices for consumers.
It said the share of sugar diverted for ethanol production had actually declined, from around 12 per cent in 2022-23 to around 9 per cent in 2025-26, and that nearly three-fourths of the country’s ethanol output now came from grains, particularly maize. The ministry attributed the price rise instead to a combination of factors, including lower domestic production, higher demand, hoarding, and tightening global supplies.
Sugar production in the current season is expected to be around 306 lakh metric tonnes (LMT), against an initial estimate of around 343 LMT by sugarcane-growing states, the ministry said, adding that output had been affected by red rot and top borer disease in sugarcane as well as waterlogging caused by excess rainfall. It said adequate stocks were nonetheless available to meet domestic demand until the new crushing season begins in October.
The ministry said the tightening of supplies was a global phenomenon, with the world sugar deficit for 2026-27 estimated at around 33 LMT amid concerns over weather conditions. International sugar prices, it said, had risen from $474 per tonne on June 30, 2026 to $552 per tonne on August 20, 2026, an increase of more than 16 per cent in under two months.
On measures to curb hoarding, the ministry said a stock limit of 400 tonnes had been imposed on sugar dealers nationwide from August 1 to November 30, 2026, and that from September 1, bulk consumers would not be permitted to hold stocks exceeding 15 days of consumption. Joint teams of central and state officials were carrying out physical verification of stocks at mills to check hoarding and artificial scarcity, it said.
As a precautionary step, the government has decided to permit duty-free import of 10 LMT of raw sugar to augment domestic availability, the ministry said. States and mills have also been advised to begin crushing from October 15, 2026, a move expected to lift October sugar output from the usual 3-4 LMT to more than 10 LMT and improve availability during the festive season.
The ministry said the ethanol programme had benefited farmers and strengthened sugar mills, and reiterated that the government remained committed to protecting the interests of both consumers and cane growers. It said it would continue to monitor sugar stocks, prices and market practices, and take necessary measures to prevent hoarding and unwarranted price increases while ensuring timely payment of dues to farmers.
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Source : ChiniMandi
