Sugar Output Estimated at 306 Lakh Tonnes Against Initial Forecast of 343 Lakh Tonnes; Duty-Free Imports and Early Crushing Planned to Boost Festive Season Supplies
India’s sugar prices have risen sharply in recent weeks, increasing by approximately 15.6% from ₹48.18 per kg on July 20, 2026, to ₹55.70 per kg on August 20, 2026. The increase comes amid lower-than-expected domestic production, weather-related crop damage, rising international prices and higher demand ahead of the festive season. The government has attributed part of the recent price pressure to speculation and hoarding by some market participants and has introduced stock restrictions, proposed additional imports and encouraged an early start to the new crushing season to improve domestic availability.
India’s sugar industry remains a significant contributor to agriculture, rural employment and the country’s food-processing and biofuel sectors. As the world’s second-largest sugarcane producer, India supports nearly five crore sugarcane farmers and around five lakh workers in sugar factories and allied industries. According to the Third Advance Estimate released by the Ministry of Agriculture and Farmers Welfare, sugarcane production is projected at 500 million tonnes in 2025–26, representing growth of approximately 43.5% compared with 348.44 million tonnes in 2015–16. The government has also fixed the Fair and Remunerative Price (FRP) of sugarcane for the 2026–27 sugar season at ₹365 per quintal, based on a basic recovery rate of 10.25%, providing a higher assured price to farmers. 
Despite the recent retail price increase, the government maintains that adequate sugar stocks are available to meet domestic demand until the next crushing season gathers momentum. Annual sugar production in India generally ranges between 300 lakh and 340 lakh tonnes, while domestic consumption is estimated at approximately 280 lakh to 290 lakh tonnes. However, sugar production for the current season is now estimated at around 306 lakh tonnes, compared with the initial forecast of approximately 343 lakh tonnes. Red rot and top borer diseases, along with waterlogging caused by excessive rainfall, have affected sugarcane yields and contributed to the downward revision in production expectations.
The government has also rejected the argument that ethanol production is responsible for the current increase in sugar prices. The share of sugar diverted for ethanol production has declined from approximately 12% in 2022–23 to around 9% in 2025–26. Furthermore, nearly three-fourths of India’s ethanol production now comes from grain-based feedstocks, particularly maize. The ethanol blending programme is intended to reduce dependence on imported fossil fuels, strengthen energy security, support sugarcane farmers and improve the financial position of sugar mills. Diverting surplus sugar into ethanol production can also help mills manage excess inventories and improve their ability to pay farmers on time.
According to the figures provided by the government, approximately 97% of sugarcane dues for the 2025–26 season had been paid to farmers as of August 20, 2026. Improved financial performance at sugar mills has helped reduce their dependence on government assistance. Meanwhile, retail sugar prices reportedly increased by only around 3% annually between August 2024 and July 2026, indicating that the latest monthly surge represents a departure from the preceding longer-term trend.
International market conditions have added to the pressure on domestic sugar prices. The global sugar market is projected to face a deficit of approximately 33 lakh tonnes in 2026–27. International sugar prices rose from $474 per tonne on June 30, 2026, to $552 per tonne on August 20, 2026, an increase of more than 16% in less than two months. India also exports sugar to destinations including Sri Lanka, West Asia and East Africa, meaning global price movements can influence domestic market expectations and trade decisions.
To address the immediate price increase, the government has imposed a stock limit of 400 tonnes on sugar dealers nationwide from August 1 to November 30, 2026. From September 1, bulk consumers have also been restricted from holding sugar stocks exceeding 15 days of consumption. Central and state government teams are conducting physical inspections of sugar stocks at mills to identify possible hoarding and artificial scarcity. As an additional precautionary measure, the government has decided to permit duty-free imports of 10 lakh tonnes of raw sugar to supplement domestic supplies.
The government has also advised states and sugar mills to begin crushing operations from October 15, 2026. The early start is expected to increase October sugar production from the usual three lakh to four lakh tonnes to more than 10 lakh tonnes, improving supplies during the festive season. The effectiveness of these measures will depend on the timely arrival of imported sugar, compliance with stock limits and the pace at which new-season production reaches the market.
India’s sugar industry is also undergoing a broader transition as producers balance domestic consumption, exports, farmer remuneration and ethanol manufacturing. Although the latest price rise has raised concerns about affordability and market stability, the government maintains that the country has sufficient stocks to meet domestic requirements. The coming weeks will be important in determining whether additional imports, anti-hoarding measures and early crushing operations can ease short-term supply pressures and stabilise retail sugar prices.
