India is preparing to deal with a growing sugar surplus by increasing exports and diverting more sugar for ethanol production, with the aim of protecting sugarcane farmers from potential income losses.
A senior government official said the surplus, if left unchecked, could hurt farmers as well as the sugar industry. “We cannot allow excess stocks to harm farmers’ interests. It is important to control the surplus for the benefit of all stakeholders,” said Food Secretary Sanjeev Chopra.
Production to Exceed Domestic Demand
India’s sugar production for the 2025–26 marketing year (which began on October 1) is estimated to rise sharply by 18% to about 30.9 million tonnes, even after diverting 3.4 million tonnes for ethanol blending. In comparison, India’s annual domestic sugar consumption stands at around 29 million tonnes, indicating excess supply.
To address this, the government has already approved the export of 1.5 million tonnes of sugar in the current season.
Export Strategy and Market Impact
India is the world’s second-largest sugar producer and was also the second-largest exporter until 2022–23, shipping an average of 6.8 million tonnes annually. However, due to drought conditions, sugar exports were banned in 2023–24, and only 1 million tonnes were allowed last year.
Higher exports from India could put further pressure on global sugar prices, which are currently near five-year lows in both New York and London markets.
Falling Prices Raise Industry Concerns
The sugar industry expects a glut in supplies by mid-January, which could lead to a gradual decline in prices and create financial stress for mills. Sugar prices have already dropped by nearly 4% since the start of the current marketing year.
Acknowledging these concerns, the government said it is working on additional measures. “In the next month or so, we will take decisions that will support the industry and ensure timely payments to farmers,” Chopra said.
Possible Increase in Minimum Sugar Price
Among the options under consideration is raising the minimum selling price of sugar in the domestic market, which could help mills improve cash flow and meet their payment obligations to farmers.
Overall, the government is looking at a combination of exports, ethanol diversion, and pricing support to manage surplus sugar and maintain stability in the sector.
