India, Aug. 26 -- The Government of India has issued a release:
MYTH
FACT
Ethanol diversion caused the sugar price rise.
Sugar diverted to ethanol production fell from 12% in 2022-23 to around 9% in 2025-26.
Ethanol is taking away sugar from consumers.
Nearly three-fourths of India's ethanol now comes from grains, particularly maize.
India is facing a sugar shortage.
Adequate stocks are available to meet domestic demand until the new crushing season begins.
Global sugar prices have remained stable.
International prices rose from $474 to $552 per tonne, increasing over 16% in less than two months.
India's sugar production has collapsed.
Current production is estimated at 306 LMT, below the initial estimate of 343 LMT.
Sugar prices have been continuously rising sharply.
Long-term prices increased by only around 3% annually between August 2024 and July 2026. Current hike price is short-term.
India's Sugar Industry at a Glance
India's sugar industry is a major agricultural, industrial, and rural livelihood ecosystem. India is the world's second-largest sugarcane producer. The sugarcane sector supports nearly 5 crore farmers and around 5 lakh workers in sugar factories and its allied industries.
The Role of the Indian Sugar Industry in Advancing Ethanol Blending
The blending of ethanol with petrol is aimed at reducing dependence on fossil fuels and enhancing energy security. This move is in sync with the government's push for sustainable fuel alternatives. This initiative also supports farmers by providing them with a stable income and reducing greenhouse gas emissions. However, this does not mean that ethanol blending would lead to a shortage in sugar for domestic consumption.
In fact, the ethanol programme has helped sugarcane farmers and strengthened sugar mills:
Analysing the Current Sugar Price Hike
Sugar prices have increased in recent weeks, from Rs.48.18 per kg on July 20, 2026, to Rs.55.70 per kg on August 20, 2026. This reflects an increase of around 15.6% within one month. It's worth distinguishing this recent movement from the longer-term trend, however: as noted earlier, sugar prices rose by only about 3% annually between August 2024 and July 2026. This suggests the current uptick largely reflects short-term supply and market factors, rather than a shift in the underlying price trend.
The present increase in sugar prices is due to a combination of factors, including:
Sugar production during the current season is expected to be around 306 LMT, compared to the initial estimate of around 343 LMT. Production has been affected by two factors: Red Rot and Top Borer disease, and waterlogging caused by excess rainfall. However, despite the lower-than-estimated production, adequate sugar stocks are available in the country to meet domestic demand. The new crushing season will begin in October.
The tightening of sugar supplies is a global phenomenon and is not limited just to India. The global sugar deficit for 2026-27 is estimated at around 33 lakh MT. As a result, international sugar prices have risen sharply from $474/tonnes on June 30, 2026 to $552/tonnes on August 20, 2026. This marks an increase of over 16% in less than two months.
Table 1: Myth v/s Fact of Rising Sugar Prices
The government has observed that speculation and hoarding by some sugar mills and traders have also contributed to the recent price increase.
Government Efforts to Curb Hoarding of Sugar and Increase Supply
The government has taken the following steps to control the short-term price hike in sugar and curb the ongoing sugar hoarding:
Looking Beyond the Current Price Rise
India's sugar sector has evolved into a diversified industry that supports farmers, mills, energy production, and global trade. Recent price pressures reflect lower production, seasonal demand, global supply conditions, and market practices. However, these pressures remain temporary against the sector's broader growth and diversification. The government's priority remains balancing consumer interests, timely farmer payments, and industry stability.
References
Ministry of Agriculture & Farmers Welfare
https://dfpd.gov.in/sugar-policy/en
https://www.nfsm.gov.in/BriefNote/BN_Sugarcane.pdf
https://sansad.in/getFile/annex/241/Au1986.pdf?sourcepqars
https://www.pib.gov.in/PressReleasePage.aspx?PRID2258113®3&lang1
https://www.pib.gov.in/Pressreleaseshare.aspx?PRID1555573®48&lang2
https://www.pib.gov.in/PressReleaseDetail.aspx?PRID2302874®48&lang1
Ministry of Commerce & Industry
https://agriwelfare.gov.in/Documents/Time_Series_3rdAE_2025_26_En.pdf
https://agriexchange.apeda.gov.in/India/GenerateAPEDAProductReport/Index
https://www.ibef.org/blogs/from-fields-to-fuel-the-indian-sugar-industry-s-role-in-advancing-ethanol-blending
Ministry of Petroleum & Natural Gas
https://www.pib.gov.in/PressReleaseDetail.aspx?PRID2249431®3&lang2
Ministry of Consumer Affairs, Food & Public Distribution
https://www.pib.gov.in/PressReleasePage.aspx?PRID2302018&lang1®3
PIB Backgrounder
https://www.pib.gov.in/PressReleasePage.aspx?PRID2245639®3&lang1
https://www.pib.gov.in/PressReleasePage.aspx?PRID2248987®3&lang1
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Disclaimer: Curated by HT Syndication.
