Government Takes Measures to Curb Sugar Price Rise and Ensure Adequate Availability During Festive Season
New Delhi, August 2026: The Government is closely monitoring the recent rise in sugar prices and has taken a series of measures to ensure adequate domestic availability and maintain price stability, particularly ahead of the festive season.
Retail sugar prices increased from ₹48.18 per kg on July 20, 2026, to ₹55.70 per kg on August 20, 2026. The Government has clarified that the increase cannot be attributed to the diversion of sugar for ethanol production.
Rise in Sugar Prices Not Linked to Ethanol
According to the Government, the proportion of sugar diverted for ethanol production has actually declined, from around 12% in 2022-23 to approximately 9% in 2025-26. Nearly three-fourths of the country's ethanol production now comes from grains, particularly maize.
The recent increase in sugar prices has been attributed to several factors, including lower-than-expected domestic sugar production, increased demand ahead of the festive season, weather-related damage to sugarcane crops, tightening global supplies, and speculation and hoarding by certain sections of the industry.
Sugar Production Below Initial Estimates
Sugar production during the current season is estimated at around 306 lakh metric tonnes (LMT), compared with the initial estimate of approximately 343 LMT made by sugarcane-growing states.
Production has been affected by diseases such as Red Rot and Top Borer, along with waterlogging caused by excessive rainfall.
Despite the lower production estimate, the Government has stated that sufficient sugar stocks are available to meet domestic requirements until the beginning of the new crushing season in October.
Global Sugar Prices Also Rising
The tightening of sugar supplies is not confined to India. The global sugar market is also facing supply constraints.
The global sugar deficit for 2026-27 is estimated at around 33 LMT. Concerns over weather conditions have further impacted the global supply outlook.
International sugar prices increased from $474 per tonne on June 30, 2026, to $552 per tonne on August 20, 2026, representing an increase of more than 16% in less than two months.
Ethanol Programme Supports Farmers and Sugar Mills
India generally produces around 320-340 LMT of sugar annually, while domestic consumption is approximately 280-290 LMT. During years of surplus production, excess sugar stocks can tie up the working capital of sugar mills and contribute to delays in payments to sugarcane farmers.
The Government said that diverting surplus sugar towards ethanol has helped address this structural issue and strengthened the financial position of sugar mills.
As of August 20, 2026, around 97% of sugarcane dues for the 2025-26 season had already been paid to farmers.
The improved financial health of sugar mills has also reduced their dependence on government support. While approximately ₹14,600 crore in subsidies was provided to the sugar industry between 2014 and 2021, no similar subsidy has been announced since 2021-22.
At the same time, consumer sugar prices have remained relatively stable over the longer term, rising by around 3% annually between August 2024 and July 2026.
Government Steps to Prevent Hoarding and Increase Supply
The Government has identified speculation and hoarding by some sugar mills and traders as among the factors contributing to the recent price rise. Several measures have consequently been introduced:
- A stock limit of 400 tonnes has been imposed on sugar dealers across the country from August 1 to November 30, 2026.
- From September 1, bulk consumers will not be permitted to maintain sugar stocks exceeding 15 days of their consumption.
- Joint teams of Central and State Government officials are conducting physical verification of sugar stocks at sugar mills to detect hoarding and prevent artificial scarcity.
- As a precautionary measure, the Government has permitted duty-free import of 10 LMT of raw sugar to increase domestic availability.
- States and sugar mills have been advised to begin crushing operations from October 15, 2026. This is expected to increase October sugar production from the usual 3-4 LMT to more than 10 LMT, thereby improving availability during the festive season.
Government to Continue Monitoring Prices
The Government has reiterated its commitment to protecting the interests of both consumers and sugarcane farmers. It will continue monitoring sugar stocks, prices and market practices and take necessary measures to prevent hoarding and unjustified price increases while ensuring timely payment of sugarcane dues to farmers.