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Govt steps in to curb sugar price surge
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Tuesday, 25 August, 2026, 08 : 00 AM [IST]
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Our Bureau, Mumbai
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Sugar prices have risen sharply in recent weeks, increasing from Rs 48.18 per kg on July 20, 2026, to Rs 55.70 per kg on August 20, prompting the government to intensify monitoring and introduce measures aimed at ensuring adequate availability and preventing unwarranted price increases.
The government said the recent rise in sugar prices cannot be attributed to the diversion of sugar for ethanol production, noting that the share of sugar diverted for ethanol has declined from around 12 per cent in 2022-23 to around 9 per cent in 2025-26. Nearly three-fourths of the ethanol produced in the country now comes from grains, particularly maize.
Instead, the increase in prices has been attributed to a combination of lower-than-expected domestic production, rising demand ahead of the festive season, weather-related damage to the sugarcane crop, tightening global sugar supplies, and speculation and hoarding by some sections of the industry.
Sugar production during the current season is now expected to be around 306 lakh metric tonnes (LMT), significantly lower than the initial estimate of around 343 LMT made by sugarcane-growing states. Production has been affected by Red Rot and Top Borer disease in sugarcane, along with waterlogging caused by excess rainfall.
Despite the lower production, the government said adequate sugar stocks are available to meet domestic demand until the beginning of the new crushing season in October.
The pressure on sugar supplies is also being witnessed globally. The global sugar deficit for 2026-27 is estimated at around 33 LMT, while concerns over weather conditions have further affected the supply outlook. International sugar prices increased from $474 per tonne on June 30, 2026, to $552 per tonne on August 20, 2026, marking an increase of more than 16 per cent in less than two months.
Highlighting the role of the ethanol programme, the government said India normally produces around 320-340 LMT of sugar annually against domestic consumption of approximately 280-290 LMT. During periods of surplus production, excess stocks can block the working capital of sugar mills and delay payments to sugarcane farmers.
Diversion of surplus sugar towards ethanol production has helped address this structural issue and improve the financial health of sugar mills, the government said. As of August 20, 2026, around 97 per cent of sugarcane dues for the 2025-26 sugar season had already been paid to farmers.
The improved financial position of mills has also reduced their dependence on government support. While the sugar industry received around ?14,600 crore in subsidies between 2014 and 2021, no such subsidy has been announced since 2021-22. Meanwhile, consumer sugar prices had remained broadly stable over the longer term, increasing by around 3 per cent annually between August 2024 and July 2026, according to the government.
To curb hoarding and improve domestic availability, the government has imposed a stock limit of 400 tonnes on sugar dealers across the country from August 1 to November 30, 2026. From September 1, bulk consumers will not be permitted to hold sugar stocks exceeding 15 days of consumption.
Joint teams comprising Central and State government officials are also conducting physical verification of sugar stocks at mills to check hoarding and the creation of artificial scarcity.
As an additional precautionary measure, the government has decided to permit duty-free imports of 10 LMT of raw sugar to augment domestic supplies. States and sugar mills have also been advised to begin crushing operations from October 15, 2026, which is expected to increase sugar production in October from the usual 3-4 LMT to more than 10 LMT and improve availability during the festive season.
The government said it would continue to closely monitor sugar stocks, prices and market practices, while taking necessary steps to prevent hoarding and unwarranted price increases and ensure the timely payment of dues to sugarcane farmers.
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