Sugar Price Hike: With the festive season approaching, sugar prices have also begun to rise. Many people have attributed this to ethanol. Recently, the government has issued a clarification on this matter.
The government explained why sugar prices are rising.
Sugar Price Hike: Following a steady increase in sugar prices, the central government has taken several steps to ensure sugar availability and control prices during the festive season. According to the government, the average price of sugar on July 20th was ₹48.18 per kg, which increased to ₹55.70 per kg on August 20th.
Why is sugar becoming expensive?
The government has clarified that the increase in sugar prices is not due to the use of sugar for ethanol. According to the government, the share of sugar diverted for ethanol has declined from around 12% in 2022-23 to around 9% in 2025-26. Sugar production is also expected to be lower than anticipated this year. States initially estimated production of around 34.3 million tonnes, but now production is estimated to be around 30.6 million tonnes.
Sugarcane crops have been damaged by red rot and top borer diseases, along with excessive rainfall and waterlogging. Furthermore, increased demand during the festive season, hoarding by some traders and mills, and a global sugar shortage have also been cited as reasons for the price increase.
Pressure on sugar supply in the world too
The rise in sugar prices isn't limited to India. According to the government, the world is projected to face a sugar shortage of approximately 3.3 million tons in 2026-27. This has led to an increase in the international sugar price, from $474 per ton on June 30 to $552 per ton on August 20—an increase of more than 16% in just two months.
Stock limit to prevent hoarding
To prevent sugar hoarding, the government has imposed a stock limit of 400 tons on dealers. This rule will be in effect from August 1 to November 30, 2026. Starting September 1, large buyers, or bulk consumers, will not be able to stock more than 15 days' worth of sugar. Central and state government teams are also visiting sugar mills to inspect stocks to prevent hoarding and attempts to create artificial shortages.
Duty-free import of 1 million tonnes of sugar
To increase supply in the domestic market, the government has decided to allow duty-free imports of 1 million tons of raw sugar. States and sugar mills have been advised to begin crushing operations from October 15th. The government estimates that this could increase sugar production in October from the usual 300,000 to 400,000 tons to over 1 million tons. The government says these steps will increase sugar availability during the festive season and help ease price pressure.
