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Informist, Friday, Aug. 21, 2026

 

NEW DELHI – After permitting duty-free raw sugar imports to boost supplies, the government said sugar prices did not rally to record highs because the sweetener was diverted for ethanol production; prices rose due to lower-than-expected production and weather-related damage to the sugarcane crop. Increased speculation and hoarding ahead of the festival season also supported prices, it added. 

 

"It is incorrect to attribute the recent rise in sugar prices to diversion of sugar for ethanol production," the consumer affairs ministry said, adding that the share of sugar diverted has declined from 12% in 2022-23 to around 9% in 2025-26. Nearly three-fourths of ethanol is produced from grains, particularly maize and surplus rice from the Food Corp. of India, it added.

 

The government defended the ethanol blending programme, saying it has financially strengthened sugar mills and helped them pay sugarcane farmers. As of Friday, mills have paid 97% of sugarcane dues to farmers for the 2025-26 season, the ministry said. 

 

It is estimated that sugar mills have diverted about 3 million tonnes of sugar or sucrose for ethanol production this year. A few sugar market participants doubted if the government would allow duty-free sugar imports for fear of a public backlash over having created the problem by diverting sugar to produce ethanol for blending with petrol.

 

However, amid soaring sugar prices, on Thursday, the government permitted 1 million tonnes of the unrefined variety to be shipped into the country at nil duty until the end of October. This is expected to improve supplies in the domestic market and cool the record-high sugar prices ahead of the peak festival demand. 

 

"Sugar prices have increased in recent weeks, from 48.18 per kg on 20 July 2026 to 55.70 per kg on 20 August 2026," the ministry said.

 

The government had permitted mills to divert sugar for producing ethanol this year as sugar production was initially estimated to be 34.3 million tonnes, against the domestic consumption demand of around 29 million tonnes. However, as the season progressed, sugar production was estimated to have fallen to about 30.6 million tonnes due to crop diseases and unfavourable weather conditions. 

 

"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 ministry said. However, sugar prices rose amid concerns about limited supply, hoarding, and panic buying in the market, it added. 

 

To tame surging sugar prices, the government had imposed several measures on various stakeholders in the market. On Thursday, it permitted 1 million tonnes of duty-free raw sugar imports. On Wednesday, it mandated that bulk buyers can hold inventory of only 15 days. Friday, it had asked mills to despatch stocks within seven days of billing to prevent artificial scarcity. In July, it had imposed a stockholding limit on traders for four months starting August. 

 

However, sugar prices continued to rise across key markets to INR 5,700-INR 6,660 per 100 kg Friday from INR 5,450-INR 6,000 Thursday, traders said.  End

 

Reported by Afra Abubacker

Edited by Avishek Dutta

 

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