Sugar Prices Jump to Rs 55.70 per kg; Government Monitors Festive Supply

Sugar prices have risen significantly ahead of the festive season, increasing concerns about higher household expenses as demand traditionally picks up. Government data showed that the average price of sugar increased from Rs 48.18 per kg on July 20 to Rs 55.70 per kg on August 20, marking a sharp rise within a month. The government has said it is closely monitoring the situation and taking measures to maintain adequate domestic supplies. It has also rejected claims that the increase is primarily linked to the diversion of sugar for ethanol production.

The Ministry of Consumer Affairs said several factors have contributed to the recent rise in prices. These include lower-than-expected domestic sugar production, increased demand ahead of the festive season, weather-related damage to sugarcane crops, tightening global supplies and possible speculation and hoarding. Sugar production for the current season is now estimated at around 306 lakh metric tonnes (LMT), significantly below the initial estimate of about 343 LMT made by sugarcane-growing states.

The government has also pointed to crop damage caused by diseases such as Red Rot and Top Borer, along with excessive rainfall and waterlogging in some sugarcane-growing regions. Despite the lower production estimate, authorities said domestic stocks are sufficient to meet consumption requirements until the next crushing season begins in October. The government expects the start of crushing operations to improve availability and ease pressure on prices during the festive period.

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On the ethanol issue, the government said the proportion of sugar diverted for ethanol production has actually declined in recent years. The share fell from around 12 per cent in 2022-23 to approximately 9 per cent in 2025-26. At the same time, nearly three-fourths of India's ethanol production now comes from grains, particularly maize. The government has defended the ethanol programme, saying it has helped sugar mills manage surplus production, improve their finances and ensure timely payments to sugarcane farmers.

Global market conditions have also added pressure to domestic sugar prices. The global sugar market is estimated to face a deficit of around 33 LMT in 2026-27, while concerns over weather conditions have raised uncertainty around production. International sugar prices increased from about $474 per tonne on June 30 to $552 per tonne on August 20. To prevent domestic shortages and curb speculative activity, the government has imposed a stock limit of 400 tonnes on sugar dealers from August 1 to November 30. Bulk consumers will also face a 15-day stock limit from September 1.

The government has further approved duty-free imports of 10 LMT of raw sugar to improve domestic availability. States and sugar mills have been advised to begin crushing from October 15, with production in October expected to exceed the usual 3-4 LMT and potentially cross 10 LMT. Authorities are also conducting physical checks of sugar stocks at mills to identify possible hoarding. The government said it will continue monitoring prices and supplies while taking steps to prevent artificial scarcity and ensure that sugarcane farmers receive their dues on time.

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