The sugar industry on Monday attributed the recent spike in prices to speculative buying by traders and bulk consumers, as well as lower-than-estimated production, even as it maintained that there is no shortage of the sweetener.
The industry has stated that net sugar production after diversion for ethanol manufacturing in the 2025-26 season (October-September) is estimated at around 27.9 million tonne (MT), while the opening stock was 5 MT.
Annual domestic demand is seen at 28-28.5 MT, while the country exported 0.8 MT of sweetener before the government imposed a ban.
“India does not have a sugar shortage. Our production and stock position remain fundamentally comfortable,” Niraj Shirgaokar, President, Indian Sugar and Bio-Energy Manufacturers Association (ISMA), said.
ISMA has projected the opening stock of sweetener at around 3.5 MT on October 1, 2026. “That is a healthy buffer against normal domestic demand, even after accounting for sugar diverted to ethanol,” he said.
Shirgaokar said that average retail prices have risen but said the “increase is not being driven by any actual shortfall in availability”.
He further said that prices have started to ease following the government’s decision to allow duty-free imports of 1 MT of raw sugar and impose stock-holding limits on dealers as well as bulk consumers.
Ex-mill prices have eased in the last few days and are currently ruling at around Rs 55-56 per kg in two major sugar-producing states — Maharashtra and Uttar Pradesh, he said.
ISMA has stated that gross sugar production, excluding diversion to ethanol, was revised to around 30.9 MT from the initial estimate of 34.5 MT, mainly due to weather-related effects, lower cane yield and lower recovery, including a higher crush rate in Maharashtra and red-rot-related varietal issues in Uttar Pradesh, an official said.
Shirgaokar said the industry was not involved in creating any artificial scarcity or increasing rates. However, he did not rule out the possibility that some mills might be holding stocks and said the government is looking into that. “The mills sold 75-80% of their stocks in the current marketing year at a loss, and they might achieve break-even,” he said.
The average retail price of sugar stood at Rs 63.05 a kg on Monday, up 37% y-o-y and 30% month-on-month, according to the Department of Consumer Affairs’ price monitoring cell. International sugar prices rose 16% to $552/tonne last week from $474/tonne on June 30.
The government last week attributed the sharp spike in sugar prices to factors including a fall in domestic production due to weather-related damage, a demand spike ahead of the festive season, high global prices and hoarding by some producers.
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.