The government has stepped up measures to contain the recent rise in sugar prices and ensure adequate supplies during the upcoming festive season. According to the Ministry of Consumer Affairs, Food and Public Distribution, the average sugar price increased from ₹48.18 per kg on July 20 to ₹55.70 per kg on August 20, 2026.

The government said it is closely monitoring prices, stocks and market practices and has taken measures to prevent hoarding and strengthen domestic availability. It also rejected claims that the recent price increase was primarily caused by the diversion of sugar for ethanol production.

Sugar Production Below Estimate

Domestic sugar production during the current season is estimated at around 306 lakh metric tonnes (LMT), significantly below the initial estimate of approximately 343 LMT made by sugarcane-growing states.

The government attributed the lower production to factors including Red Rot and Top Borer diseases in sugarcane, along with waterlogging caused by excessive rainfall.

Despite the lower production estimate, the government said available stocks are sufficient to meet domestic requirements until the next crushing season begins in October.

Ethanol Not Behind Price Rise

The government said the recent increase in sugar prices cannot be attributed to ethanol production. The proportion of sugar diverted for ethanol has actually declined from around 12% in 2022-23 to approximately 9% in 2025-26.

It also pointed out that nearly three-fourths of ethanol produced in India now comes from grains, particularly maize.

According to the government, the current rise in sugar prices is linked to several factors, including lower-than-expected domestic production, increased demand ahead of the festive season, weather-related crop damage, tighter global supplies and speculation or hoarding.

Global Sugar Supplies Tighten

The price pressure is not limited to the domestic market. The government said global sugar supplies are also tightening, with the estimated global deficit for 2026-27 placed at around 33 LMT.

International sugar prices rose from $474 per tonne on June 30 to $552 per tonne on August 20, an increase of more than 16% in less than two months.

Weather concerns have also contributed to uncertainty over global sugar production and supply, adding to the pressure on international prices.

Ethanol Programme Supports Mills

India generally produces around 320-340 LMT of sugar annually, while domestic consumption is estimated at around 280-290 LMT. In surplus years, excess stocks can put financial pressure on sugar mills and affect timely payments to sugarcane farmers.

The government said diverting surplus sugar towards ethanol has helped address this structural issue and improve the financial position of sugar mills.

As of August 20, 97% of sugarcane dues for the 2025-26 sugar season had been paid to farmers, according to the government.

The Centre also said the sugar industry's dependence on government support has reduced. While around ₹14,600 crore in subsidies was provided to the sector between 2014 and 2021, no similar subsidy has been announced since 2021-22.

Stock Limits to Check Hoarding

To prevent artificial scarcity and speculative activity, the government has introduced several measures.

A 400-tonne stock limit has been imposed on sugar dealers across the country from August 1 to November 30, 2026. From September 1, bulk consumers will also be restricted from holding stocks exceeding 15 days of their consumption.

Central and state government teams are conducting physical verification of sugar stocks at mills to identify possible hoarding and ensure accurate reporting of inventories.

The government has also decided to permit duty-free import of 10 LMT of raw sugar as a precautionary measure to increase domestic availability.

Crushing to Start Earlier

States and sugar mills have been advised to begin the new crushing season from October 15, 2026.

The government expects the earlier start to increase sugar production in October from the usual 3-4 LMT to more than 10 LMT, potentially improving availability during the festive period.

The Centre said it would continue monitoring sugar prices, stocks and market practices while taking steps to protect consumers from unwarranted price increases and ensure timely payments to sugarcane farmers.

Congress president Mallikarjun Kharge has questioned the Centre over the sharp rise in sugar prices and declining domestic stocks, raising concerns about sugar imports and the government's ethanol policy ahead of the festive season.

In a post on X on Saturday, Kharge questioned what he described as a contradiction between the government's Atmanirbhar Bharat push and the decision to allow duty-free sugar imports. He asked why sugar stocks in India, one of the world's major sugar producers and exporters, had fallen to a nine-year low and why the government had permitted the import of 10 lakh tonnes of sugar without duty.

Kharge also questioned the diversion of sugarcane towards ethanol production for petrol blending while India was importing sugar to meet domestic requirements. He raised three questions for the Centre amid the increase in sugar prices, which, according to the figures cited in the report, have risen by ₹19 per kg over three months and are around 40% higher.

Centre Rejects Ethanol Link

The Ministry of Consumer Affairs, Food and Public Distribution has rejected the claim that the increase in sugar prices was linked to the diversion of sugar towards ethanol production.

According to the ministry, the proportion of sugar diverted for ethanol production declined from around 12% in 2022-23 to about 9% in 2025-26. It also said that nearly three-fourths of India's ethanol production now comes from grains, particularly maize.

The government attributed the recent rise in sugar prices to several factors, including lower domestic production, increased demand ahead of festivals, weather-related crop damage, tight global supplies and alleged hoarding and speculative activity.

Sugar Production Estimate Cut

India's sugar production for the current season has been estimated at 306 lakh metric tonnes (LMT), significantly lower than the earlier projection of 343 LMT.

The reduction has been attributed to crop damage caused by diseases such as red rot and top borer, along with waterlogging following excessive rainfall in several sugarcane-growing regions.

Despite the downward revision, the Consumer Affairs Ministry said domestic sugar stocks would remain adequate to meet the country's requirements until the beginning of the new crushing season in October.

Global Shortage Adds Pressure

International market conditions have also contributed to the rise in sugar prices. The global sugar market is estimated to face a deficit of around 33 LMT in 2026-27, adding pressure to international prices.

International sugar prices increased from around $474 per tonne on June 30 to $552 per tonne on August 20, representing a rise of more than 16% in less than two months.

The increase in global prices comes at a time when domestic demand is expected to rise during the upcoming festive season, putting additional pressure on the Indian sugar market.

Centre Tightens Stock Limits

The government has also introduced measures aimed at preventing hoarding and speculative activity in the domestic market. A 400-tonne stock limit has been imposed on dealers until November 30.

A separate 15-day stock limit for bulk consumers will come into effect from September 1. The Centre and state governments have also formed joint teams to physically verify sugar stocks at mills.

The government says the inspections are intended to ensure accurate reporting of available stocks and prevent artificial shortages in the domestic market.

With sugar prices rising ahead of the festive season, the issue has now become a point of political confrontation, with Kharge questioning the Centre's import and ethanol policies while the government attributes the price increase primarily to lower production, weather damage, global market conditions and demand-related factors.

India Imposes Sugar Export Ban Till Sept 2026

Government tightens grip on sugar outflows to secure domestic stocks and steady prices amid festive demand.

In a swift move to safeguard local supply, the Centre has banned sugar exports effective May 13 until September 30, 2026, or further notice. The Ministry of Commerce and Industry notified the change late Tuesday, shifting raw, white, and refined sugar from 'Restricted' to 'Prohibited' category under DGFT rules. Officials say this will help control prices and ensure availability, especially with festivals looming.

Ban Kicks In Immediately

The notification, issued by the Directorate General of Foreign Trade, bars all sugar shipments without special clearance. This comes after India exported 7.75 million tons in FY 2024-25—up sharply from 1 million tons the year before. Earlier years saw even higher volumes: 11 million tons in 2021-22 and 7 million in 2020-21. Sources in the trade ministry noted the decision stems from rising domestic needs.

EU, US Quotas Unaffected

Not all doors are shut. Exports to the European Union and US under CXL and TRQ quotas will continue as per existing schedules. Shipments tied to the Advance Authorisation Scheme also get a pass. "These are locked-in commitments," a senior official told reporters on background, stressing no disruption to key partners.

Relief for Port-Bound Cargo

Traders with sugar already in transit got some breathing room. Vessels where loading began before the notification can sail out. Same for shipments with filed bills of entry or anchored at Indian ports. Consignments handed to customs and logged electronically are exempt for now. This clause aims to avoid chaos at major ports like Mumbai and Kandla, where sugar piles up.

Neighbours' Food Security Clause

The order leaves wiggle room for emergencies. If a neighbouring country faces a sugar crunch threatening food security, New Delhi can approve limited exports case-by-case. No such requests are pending yet, per initial reports, but the provision nods to India's regional role.

Past Exports in Perspective

India's sugar outbound surged post-ethanol blending pushes, but domestic mills flagged shortages last season. FY 2023-24 exports crashed to 1 million tons amid similar curbs. The fresh India sugar export ban reverses that trend, prioritising local mills and consumers. Prices have held steady so far, but traders watch ethanol mandates closely.

Festive Season in Focus

With Diwali and other festivals ahead, the ban targets potential price spikes. Ground reports from Uttar Pradesh and Maharashtra—top sugar belts—indicate ample stocks, but rains could play spoiler. Millers welcome the step, though some grumble over lost forex. Retail prices hover around ₹40-45 per kg in key markets.

What's Next After September?

The prohibition lasts till September 30, 2026; absent extension, sugar reverts to 'Restricted' status automatically. Government circles hint at reviews based on crop yields and global cues. For now, this India sugar export ban underscores priority on home turf—steady supply over overseas sales.