Government Acts to Curb Sugar Price Rise, Ensure Adequate Availability During Festive Season
The Ministry of Consumer Affairs, Food & Public Distribution has implemented measures to address a significant increase in sugar prices, which rose from ₹48.18 per kg on 20 July 2026 to ₹55.70 per kg on 20 August 2026, representing a 15.6% increase in less than a month. The government attributes this price rise to multiple factors including lower-than-expected domestic sugar production of approximately 306 LMT compared to initial state estimates of 343 LMT, increased demand ahead of the festive season, weather-related damage to sugarcane crops including Red Rot and Top Borer disease, waterlogging from excess rainfall, tightening global sugar supplies, and speculation and hoarding by some industry participants.
The government explicitly refutes claims that ethanol production has contributed to the price increase, noting that the share of sugar diverted for ethanol has actually declined from around 12% in 2022-23 to approximately 9% in 2025-26, with nearly three-fourths of ethanol now produced from grains, particularly maize.
Globally, sugar markets are facing similar pressures with a projected deficit of 33 LMT for 2026-27, which has driven international sugar prices from $474 per tonne on 30 June 2026 to $552 per tonne on 20 August 2026, representing a 16% increase in less than two months.
To address the domestic situation, the government has implemented several concrete measures: a stock limit of 400 tonnes has been imposed on sugar dealers across the country effective from 1 August to 30 November 2026; from 1 September, bulk consumers will be restricted to holding sugar stocks not exceeding 15 days of consumption; joint teams of Central and State Government officials are conducting physical verification of sugar stocks at mills to check hoarding; duty-free import of 10 LMT of raw sugar has been permitted to augment domestic availability; and states and sugar mills have been advised to begin crushing from 15 October 2026, which is expected to increase October sugar production from the usual 3-4 LMT to more than 10 LMT.
The government emphasizes that despite lower production, adequate sugar stocks are available to meet domestic demand until the new crushing season begins in October. The ethanol program has contributed to improved financial health of sugar mills, with 97% of sugarcane dues for the 2025-26 season already paid to farmers as of 20 August 2026, reducing the industry's dependence on government support which amounted to ₹14,600 crore between 2014 and 2021 but has not been required since 2021-22.