India’s sugar industry sees short term price rise amid tighter supplies
India’s sugar prices rose 15.6% in a month due to lower production, festive demand, crop damage, global shortages and hoarding. Despite output falling to 306 LMT, adequate stocks remain. The government imposed stock limits, approved 10 lakh tonnes of duty-free imports and advanced crushing.
India’s sugar prices have risen sharply in recent weeks amid lower than expected domestic production, festive demand, weather related crop damage and tighter global supplies, although the government said adequate stocks are available to meet domestic demand until the new crushing season.
According to the government, sugar prices increased from Rs 48.18 per kg on July 20, 2026, to Rs 55.70 per kg on August 20, marking a rise of around 15.6% in a month. The government said the recent movement should be viewed against a longer term trend, with retail sugar prices increasing by only around 3% annually between August 2024 and July 2026, PIB release stated.
India is the world’s second largest sugarcane producer, with the sector supporting nearly 5 crore farmers and around 5 lakh workers in sugar factories and allied industries. Sugarcane production reached 500 MMT in 2025-26, according to the Third Advance Estimate released by the Ministry of Agriculture and Farmers Welfare, up around 43.5% from 348.44 MMT in 2015-16.
The area under sugarcane cultivation also expanded from 49.27 lakh hectares in 2015-16 to 58.87 lakh hectares in 2025-26. Uttar Pradesh and Maharashtra remain the leading sugarcane producing states.
India exported 8 lakh MT of sugar in 2025-26, compared with 0.47 lakh MT in 2016-17, with Sri Lanka, West Asia and East Africa among the major destinations.
The government has fixed the Fair and Remunerative Price (FRP) of sugarcane for the 2026-27 sugar season at Rs 365 per quintal, linked to a basic recovery rate of 10.25%. This compares with Rs 230 per quintal for 2016-17 at a basic recovery rate of 9.5%.
The government also said the ethanol programme has helped address surplus sugar production and improve the financial position of mills. India produces around 300-340 lakh MT of sugar annually against domestic consumption of around 280-290 lakh MT. In surplus years, excess stocks can block mill funds and delay payments to farmers, while diversion towards ethanol has helped ease this structural pressure.
The share of sugar diverted for ethanol production declined from around 12% in 2022-23 to around 9% in 2025-26. At the same time, nearly three-fourths of ethanol produced in India now comes from grains, particularly maize.
As of August 20, 2026, around 97% of sugarcane dues for the 2025-26 season had been paid to farmers, according to the government. It said stronger mill finances had also reduced dependence on government support, while retail sugar prices had remained broadly stable over the longer term.
The current sugar price increase has been attributed to several factors, including lower than expected domestic production, higher demand ahead of the festive season, damage to the sugarcane crop caused by weather conditions, rising international prices and tighter global supplies. The government also observed that speculation and hoarding by some sugar mills and traders had contributed to the recent increase.
Domestic sugar production for the current season is expected at around 306 LMT, against an initial estimate of around 343 LMT. Production has been affected by Red Rot and Top Borer diseases as well as waterlogging caused by excess rainfall. Despite the lower output estimate, the government said adequate stocks are available to meet domestic demand until the new crushing season begins in October.
The pressure on supplies is also being seen internationally. The global sugar deficit for 2026-27 has been estimated at around 33 lakh MT, while international sugar prices increased from $474 per tonne on June 30, 2026, to $552 per tonne on August 20, a rise of more than 16% in less than two months.
The government has taken measures to contain the short term price increase and curb hoarding. A stock limit of 400 tonnes has been imposed on sugar dealers nationwide from August 1 to November 30, 2026. From September 1, bulk consumers will not be allowed to hold stocks exceeding 15 days of consumption.
Central and state government teams are also carrying out physical verification of sugar stocks at mills to check hoarding and artificial scarcity. As a precautionary measure, the government has decided to permit duty free imports of 10 lakh MT of raw sugar to strengthen domestic availability.
States and sugar mills have also been advised to begin crushing from October 15, 2026. The government expects October production to rise from the usual 3-4 lakh MT to more than 10 lakh MT, which would improve sugar availability during the festive season.
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Source : ChiniMandi
