Kolkata: Global sugar prices have dropped significantly due to excess supply from Brazil, but the outlook for India’s sugar industry remains stable, according to a report by ICRA Limited.
The report noted that international sugar prices in the 2025–26 sugar season have stayed below the cost of production and below prevailing domestic prices in India. This decline is mainly linked to a large surplus of sugar from Brazil, which has increased global supply.
Worldwide sugar production for the 2025–26 season is estimated at 189.3 million metric tonnes, about 5% higher than the previous year. In comparison, global consumption is expected to reach 178.1 million metric tonnes, registering a modest 1% annual increase. The higher production relative to demand has pushed global prices downward.
As a result, raw sugar prices dropped to around $313 per metric tonne in February 2026, compared with $445 per metric tonne in February 2025. Similarly, white sugar prices declined to $408 per metric tonne from $532 per metric tonne during the same period. The premium between white and raw sugar stood at $95 per metric tonne in February 2026, slightly higher than $87 per metric tonne a year earlier.
Despite the global price volatility, India’s domestic sugar market remains comfortable. According to the third advance estimates from the Indian Sugar Mills Association, the country’s gross sugar production in the 2025–26 season is projected to rise 9.4% to 32.41 million metric tonnes, compared with 29.6 million metric tonnes last season.
After diverting an estimated 3.1 million metric tonnes of sugar for ethanol production, net sugar output is expected to be around 29.3 million metric tonnes. With domestic consumption estimated at 28.3 million metric tonnes and exports projected at 0.7 million metric tonnes, the closing stock is likely to reach 5.6 million metric tonnes, equivalent to roughly two months of consumption.
ICRA Limited expects operating margins of integrated sugar mills to remain stable at around 10–10.5% in FY2026, compared with 9.6% in the previous year. The improvement is supported by better cane availability, stable domestic sugar prices and steady performance from distillery operations.
Revenue growth for integrated sugar mills is projected to remain moderate at 5–8% in FY2026, mainly due to higher cane availability and stable sugar prices. However, margins are expected to remain largely steady because sugarcane prices have increased while ethanol prices have remained mostly unchanged.
India has also continued to make progress in its ethanol blending programme. During the first three months of the 2025–26 ethanol supply year, the blending rate reached 19.98%, with 239 crore litres of ethanol blended, including 59.2 crore litres in January 2026 alone.
Meanwhile, the government has increased the Fair and Remunerative Price (FRP) for sugarcane by ₹15 to ₹355 per quintal for a basic recovery rate of 10.25%. In Uttar Pradesh, the State Advised Price has been raised to ₹400 per quintal for early-maturing varieties and ₹390 per quintal for normal varieties.
The report also highlighted that the borrowings of integrated sugar mills are expected to decline in FY2026 due to improved profits and repayment of loans taken for distillery projects. This is likely to strengthen the sector’s financial structure and improve overall credit metrics.
