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.