Archive · 22 Aug 2026
India Sugar Prices Rise as Government Rejects Ethanol Link
Sugar has become more expensive in India.
The government says this happened because less sugar was produced and demand increased before festivals.
Heavy rain and sugarcane diseases damaged some crops.
The government also says sugar supplies are tighter around the world.
It says some mills and traders may have hoarded sugar or speculated on prices.
Some people blamed the ethanol policy because sugar can be used to make fuel.
The government disagrees, saying the share of sugar used for ethanol has fallen and much ethanol now comes from grains such as maize.
To improve supplies, it is allowing imports, limiting stocks and asking mills to start crushing sugarcane earlier.
Retail sugar prices increased from ₹48.18 to ₹55.70 per kg between July 20 and August 20, 2026.
The government attributed the rise to lower output, festive demand, crop damage, global supply pressures, hoarding and speculation.
The Centre rejected an ethanol-related explanation, saying sugar diversion fell from about 12% in 2022-23 to 9% in 2025-26.
Current-season production is projected at 306 lakh metric tonnes, below the initial estimate of 343 lakh metric tonnes.
Measures include stock limits, duty-free imports of 10 lakh metric tonnes of raw sugar and earlier crushing from October 15.
- Who
- The Government of India, the Ministry of Consumer Affairs, Food and Public Distribution, sugar mills, dealers, traders, bulk consumers, sugarcane farmers and consumers.
- What
- Sugar prices rose sharply, leading the government to impose stock limits, approve imports and promote earlier crushing.
- When
- Prices rose between July 20 and August 20, 2026; the government issued its clarification on August 21, 2026.
- Where
- India, amid additional pressure from international sugar markets.
- Why
- The government cited lower domestic production, festive demand, weather-related crop damage, tighter global supplies, hoarding and speculation, while rejecting diversion for ethanol as the main cause.
Ethanol Diversion Critics
Government Position
Cause of the price rise
Ethanol Diversion Critics
Critics have linked higher sugar prices to the diversion of sugar for ethanol, arguing that sugar used for fuel is unavailable for direct consumption.
Government Position
The government says it is incorrect to attribute the increase to ethanol diversion because the share diverted has declined from about 12% to 9%.
Main supply pressures
Ethanol Diversion Critics
The ethanol-focused explanation emphasizes reduced sugar availability for consumers during a period of rising demand.
Government Position
The Centre points instead to lower domestic production, festive demand, crop damage, tighter global supplies, hoarding and speculation.
Effect of ethanol policy
Ethanol Diversion Critics
Critics’ concerns suggest that ethanol production may contribute to tighter consumer sugar supplies and higher prices.
Government Position
The government says using surplus sugar for ethanol has improved sugar mills’ finances, helped pay farmers and reduced the industry’s dependence on government support.
- Retail price increase
- Sugar rose from ₹48.18 per kg on July 20 to ₹55.70 per kg on August 20, 2026, an increase of about 16%.
- Domestic production
- Current-season production is expected to be around 306 lakh metric tonnes, compared with an initial estimate of 343 lakh metric tonnes.
- Ethanol diversion
- The share of sugar diverted for ethanol reportedly declined from about 12% in 2022-23 to about 9% in 2025-26.
- Crop damage
- The government cited Red Rot, Top Borer disease and waterlogging caused by excessive rainfall.
- Global sugar market
- The government estimated a global sugar deficit of around 33 lakh metric tonnes in 2026-27; international prices rose from $474 to $552 per tonne between June 30 and August 20, 2026.
- Stock limits
- Sugar dealers face a 400-tonne stock limit from August 1 to November 30, while bulk consumers may hold no more than 15 days of consumption from September 1.
- Supply measures
- The Centre approved duty-free imports of 10 lakh metric tonnes of raw sugar and advised mills to begin crushing on October 15.
Sources
Sugar Price Hike: Govt Rejects Ethanol Link, Cites Low Output, Hoarding For Cost Increase
Incorrect to attribute sugar price hike to ethanol production: Govt
What's behind rising sugar prices in India? Government breaks silence, says 'ethanol...'
