New Delhi: Sugar prices in India have surged to record levels, with retail prices crossing ₹50 per kg in some markets. Sugar prices have increased by around 10% in the past month, raising concerns about supplies and further price increases during the upcoming festive season. To contain the price rise and ensure adequate domestic availability, the government is reportedly considering restrictions on the use of sugarcane for ethanol production.
According to a Reuters report, citing two government sources and two sugar industry sources, the Centre is considering limiting the diversion of sugarcane towards ethanol in the new season. The move is aimed at increasing the availability of sugar in the domestic market and preventing prices from rising further amid strong festive demand.
The sharp rise in sugar prices comes at a time when consumption is expected to increase during the festive season. Market prices could remain elevated over the next three months, while lower rainfall in major sugar-producing states such as Maharashtra and Karnataka has raised concerns over sugar production in the upcoming season.
During the current sugar season, which ends in September, sugar mills have reportedly diverted around 3 million tonnes of sugar, or nearly 10% of total production, towards ethanol manufacturing. If the government restricts the use of sugarcane for ethanol production in the next season, this quantity could potentially remain available for sugar production.
The additional availability of around 3 million tonnes of sugar could help improve domestic supplies and put downward pressure on prices. However, any restriction on sugarcane diversion for ethanol would also have implications for India’s ethanol blending programme and the sugar industry’s strategy of balancing sugar production with ethanol production.
The government’s reported move highlights the growing challenge of balancing domestic sugar prices, consumer demand, sugarcane availability and India’s ethanol blending targets as the new sugar season approaches
