Government Acts to Curb Sugar Price Rise, Ensure Adequate Availability During Festive Season
The Ministry of Consumer Affairs, Food & Public Distribution has implemented comprehensive 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 surge to multiple factors including lower-than-expected domestic sugar production, increased demand ahead of the festive season, weather-related damage to sugarcane crops, tightening global sugar supplies, and speculation and hoarding by some industry participants.
Sugar production for the current season is now expected to be around 306 lakh metric tonnes (LMT), substantially lower than the initial estimate of 343 LMT by sugarcane-growing states. This production shortfall is primarily due to Red Rot and Top Borer disease affecting sugarcane crops, combined with waterlogging caused by excess rainfall. Despite the production decline, the government confirms that adequate sugar stocks are available to meet domestic demand until the new crushing season begins in October.
The government explicitly refutes claims that ethanol diversion has contributed to price increases, noting that the share of sugar diverted for ethanol has actually declined from approximately 12% in 2022-23 to around 9% in 2025-26, with nearly three-fourths of ethanol production now coming from grains, particularly maize.
Globally, sugar markets are experiencing similar tightness, with a projected deficit of 33 LMT for 2026-27. International sugar prices have increased 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 specific 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 its ethanol program has actually benefited the sector by improving the financial health of sugar mills and ensuring timely payments to farmers. As of 20 August 2026, 97% of sugarcane dues for the 2025-26 sugar season have been paid to farmers, and the industry's reduced dependence on government support is evidenced by the fact that while approximately ₹14,600 crore of subsidy was provided between 2014 and 2021, no such subsidy has been announced since 2021-22.