Sugar prices in India have risen sharply, increasing by 4.3 per cent in the past week and nearly 17 per cent over the last month. According to government data, the all-India average sugar price has climbed to around Rs 4,620 per quintal from Rs 3,960 per quintal a month earlier. The sharp increase has raised concerns among sugar industry stakeholders and could also have implications for India’s ethanol production.
Industry experts said higher sugar prices could make sugar production more attractive for mills compared with diverting sugar or sugarcane towards ethanol. If sugar prices remain firm, mills may prefer selling sugar in the domestic market, potentially affecting the availability of feedstock for ethanol production and the pace of ethanol blending expansion.
The recent rise in sugar prices has been attributed to lower production, deficient rainfall in some sugar-producing regions and increased demand ahead of the festive season. In an effort to control domestic prices and ensure adequate availability, the government has already taken measures including restrictions on sugar exports and the imposition of stock limits on traders.
The Centre regulates domestic sugar supplies through monthly sales quotas for sugar mills. For August, the government has fixed the sugar sales quota at 2.25 million tonnes, unchanged from the quota allocated during August last year. Industry officials expect the government to continue monitoring the market closely and introduce additional measures if sugar prices remain elevated.
The government’s stock-limit order came into effect on August 1 and will remain in force until November 30. Under the order, sugar dealers cannot hold stocks for more than 30 days and are not permitted to hold more than 4,000 quintals of sugar at any single location. Authorities can take action against traders and dealers found holding stocks beyond the prescribed limits.
Sugar prices could remain under pressure during the upcoming festive season as demand is expected to increase. A further rise in prices could add to the burden on consumers while also making it more difficult for the government to consider additional sales quotas without risking further pressure on the domestic market.
The increase in sugar prices comes at a time when ethanol producers are already facing concerns over profitability. All India Distillers’ Association president Vijendra Singh recently said ethanol prices have remained unchanged for an extended period, while sugarcane prices have increased by around 16 per cent since ethanol prices were last revised in 2022–23. According to him, the widening gap between input costs and ethanol prices has reduced the attractiveness of ethanol production for sugar mills.
The situation could become important for India’s ethanol blending programme, as sugar mills remain a major source of ethanol feedstock. If higher sugar prices encourage mills to maximise sugar production and sales instead of diverting cane or sugar towards ethanol, ethanol availability could come under pressure.
According to the Indian Sugar and Bio-energy Manufacturers Association (ISMA), India’s sugar production during the 2025–26 crushing season is estimated at around 27.9 million tonnes, while domestic sugar consumption is projected at approximately 28.5 million tonnes. The relatively tight production-consumption balance, combined with rising prices and growing ethanol demand, could create additional challenges for the sugar industry and policymakers in the coming months.
