The government on Friday attributed the sharp spike in sugar prices to factors including a fall in domestic production due to weather -related damages, a demand spike ahead of the festive season, high global prices and hoarding by some producers. However, it said that despite the lower than estimated production, adequate sugar stocks are available in the country to meet domestic demand until the new crushing season begins in October.
The government has allowed ‘duty free’ imports of 1 million tonne (MT) of sweetener and also imposed a 15-days stock-holding limit on bulk consumers.
Sugar prices remain elevated
The government had allowed exports of 2 MT amidst prospects of a bumper crop. “Overestimation of initial projections led to exports,” a source said.
The average retail price of sugar stood at Rs 54.06 a kg on Friday, up 25% y-o-y and 20% month-on-month, according to the Department of Consumer Affairs’ price monitoring cell. The international sugar prices rose 16% to $ 552/tonne on Thursday from $ 474/tonne on June 30.
The ministry stated that sugar production during the 2025-26 season (October-September) is expected less by 11% to 30.6 million tonne (MT), compared to the initial estimate of around 34.3 MT as output was affected by Red Rot and Top Borer disease in sugarcane, as well as water-logging caused by excess rainfall in the key sugarcane growing states.
According to a third advance estimate by Indian Sugar & Bio-Energy Manufacturers Association (ISMA) released in February, 2026, had projected the net sugar production at 29 MT, excluding 3.1 MT diverted for ethanol. The industry had projected the opening stock of sugar on October 1, 2026 to be around 3.5 – 4 million tonnes (MT) against 5 MT on October 1, 2025.
“The government move to allow sugar imports is a precautionary measure and will safeguard the interests of consumers and mitigate any risk of El Nino event,” Tarun Sawhney, Vice-Chairman and Managing Director, Triveni Engineering & Industries, told FE. After a significant gain on Thursday shares of sugar mills fell on Friday. Balrampur Chini Mills and Bannari Amman Sugars declined by 4.8% and 4.7%, respectively, on the BSE. Shree Renuka Sugar’s share declined by 3.94% while Triveni Engineering and Dhampur sugar mills fell by 2.01% and 1.48% respectively.
Sugar prices not impacted by ethanol diversion
The government has ruled out attributing the recent increase in sugar prices to diversion of sugar for ethanol production. “The share of sugar diverted for ethanol has declined from around 12% in 2022-23 to around 9% in 2025-26. Moreover, nearly three-fourths of the ethanol produced in the country now comes from grains, particularly maize,” according to an official note.
Rachit Mehta, Vice President, ICRA said the imports should help improve near term sugar availability and a correction in domestic sugar prices ahead of the next crushing season.