India’s sugar output seen at 306 LMT, down 10.8% from initial estimate
India’s 2025-26 sugar production is estimated at 306 LMT, 10.79% below the initial 343 LMT projection, due to crop diseases and excess rainfall. Rising prices have prompted stock limits, 10 LMT duty-free raw sugar imports, and early crushing, while the government says ethanol diversion is not responsible.
India’s sugar production in the current 2025-26 season is now estimated at around 306 lakh metric tonnes (LMT), about 10.79% lower than the initial projection of around 343 LMT made by sugarcane-growing states, as crop diseases and excess rainfall affected output, reported Times Now.
The lower production estimate comes at a time when domestic sugar prices have risen sharply ahead of the festive season. Retail prices increased from Rs 48.18 per kg on July 20, 2026, to Rs 55.70 per kg on August 20, prompting the government to step up market interventions to improve availability and curb hoarding.
According to the Press Information Bureau, Red Rot and Top Borer disease in sugarcane, along with waterlogging caused by excess rainfall, have affected production during the current October-September sugar season. Despite the decline from the initial estimate, the government said available stocks are sufficient to meet domestic consumption requirements until the next crushing season begins in October.
The government has rejected suggestions that the recent rise in sugar prices is linked to the diversion of sugar towards ethanol production. It pointed out that the proportion of sugar diverted for ethanol has actually declined from around 12% in 2022-23 to about 9% in 2025-26. At the same time, the country’s ethanol production mix has changed significantly, with nearly three-fourths of ethanol now being produced from grains, particularly maize.
Instead, the government attributed the recent increase in prices to a combination of lower-than-expected domestic production, stronger demand ahead of the festive season, weather-related crop damage, tightening global supplies and speculative hoarding by sections of the trade and industry.
Global sugar markets have also come under pressure. The worldwide sugar deficit for 2026-27 is estimated at around 33 LMT, while concerns over adverse weather have added to uncertainty over future supplies. International sugar prices have consequently risen from $474 per tonne on June 30 to $552 per tonne on August 20, representing an increase of more than 16% in less than two months.
The government also defended the ethanol programme, arguing that it has helped address a long-standing structural problem in the sugar industry. India typically produces around 320-340 LMT of sugar annually against domestic consumption of about 280-290 LMT. In surplus years, large sugar inventories lock up working capital for mills and often affect their ability to make timely payments to sugarcane farmers.
The diversion of excess sugar and sugar-based feedstock towards ethanol has helped reduce this surplus burden and strengthened the financial position of sugar mills, according to the government. As a result, 97% of sugarcane dues for the 2025-26 season had been paid to farmers as of August 20.
The improved finances of sugar mills have also reduced the industry’s dependence on direct government support. The government said around Rs 14,600 crore in subsidies was provided to the sugar sector between 2014 and 2021, but no comparable subsidy has been announced since 2021-22.
It also maintained that consumer prices have remained relatively stable over a longer period despite the recent spike. Between August 2024 and July 2026, sugar prices increased at an average annual rate of only around 3%, according to the government.
To address the latest surge, the government has imposed a stock limit of 400 tonnes on sugar dealers across the country from August 1 to November 30. Beginning September 1, bulk consumers will also be restricted from holding stocks exceeding 15 days of their consumption requirement.
Central and state government teams are conducting physical verification of sugar stocks held by mills as part of efforts to identify hoarding and prevent the creation of artificial scarcity.
In another major intervention, the government has decided to allow duty-free imports of 10 LMT of raw sugar to supplement domestic supplies and ease pressure on prices.
The government has also advised states and sugar mills to begin crushing operations from October 15. An earlier start to the season is expected to increase October production to more than 10 LMT, compared with the usual 3-4 LMT, helping improve sugar availability during the peak festive demand period.
With production falling below initial expectations and prices rising rapidly in recent weeks, the government’s immediate strategy is focused on releasing additional supplies into the market through imports, curbing excessive stockholding and advancing the start of the next crushing season. The objective, it said, is to contain unwarranted price increases while ensuring adequate supplies for consumers and protecting the ability of mills to make timely payments to sugarcane farmers.
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Source : ChiniMandi
