Archive · 22 Aug 2026
Government Rejects Ethanol Link, Blames Hoarding for India Sugar Surge
Sugar has become more expensive in India.
The government says this is not mainly because sugar is being used to make ethanol.
It says less sugarcane was available because diseases and heavy rain damaged crops.
People also buy more sugar before festivals.
Sugar supplies around the world are tighter too.
Officials believe some businesses may be storing sugar or raising prices unfairly.
The government has allowed more sugar to be imported without duty.
It has also limited how much sugar dealers and large users can keep.
Mills are being asked to start crushing sugarcane early so more sugar reaches shops.
Retail sugar prices rose to about Rs 55.70-56 per kg on August 20 from Rs 48.18 on July 20.
The government attributed the increase to lower output, crop damage, festive demand, tighter global supplies, and hoarding.
2025-26 sugar production is estimated at 30.6 million tonnes, below the earlier 34.3-million-tonne forecast.
Officials rejected an ethanol link, saying sugar diversion fell to about 9% and most ethanol now comes from grains.
The government approved duty-free imports, imposed stock limits, ordered stock checks, and urged mills to begin crushing around October 15.
- Who
- The Indian government, Food Secretary Sanjeev Chopra, sugar mills, dealers, bulk consumers, state authorities, and sugar industry bodies.
- What
- The government rejected ethanol diversion as the main cause of higher sugar prices and announced measures to increase supply and curb hoarding.
- When
- The clarification was issued on Friday; prices were compared between July 20 and August 20, stock limits begin September 1, and early crushing is planned around October 15.
- Where
- India, with the government briefing held in New Delhi.
- Why
- Officials cited lower domestic production, crop diseases, excess rainfall, festive demand, tighter global supplies, speculation, and hoarding.
Government explanation
Opposition and industry concerns
Role of ethanol
Government explanation
The government said ethanol production is not responsible for the price surge because sugar diversion has declined and most ethanol is made from grains.
Opposition and industry concerns
The Congress and Aam Aadmi Party criticized the government's E20 ethanol-blending policy, arguing that ethanol diversion contributed to higher sugar prices.
Cause of the price increase
Government explanation
Officials said some mills and industry participants raised ex-mill prices, hoarded stocks, speculated, or created artificial scarcity despite adequate supplies.
Opposition and industry concerns
The National Federation of Cooperative Sugar Factories sought a minimum sale price of Rs 43 per kg, saying mills' average realization was about Rs 40 per kg against input costs of Rs 43.
Supply conditions
Government explanation
The government said existing stocks, imports, and early crushing would be sufficient to meet domestic demand through the festive season.
Opposition and industry concerns
Lower-than-expected production, crop damage, and tighter global supplies point to genuine supply pressures, even though the articles do not establish that these factors alone caused the full price increase.
- Retail price
- The all-India retail price increased to about Rs 55.70-56 per kg from Rs 48.18 on July 20.
- Ex-mill price
- Ex-mill prices rose from Rs 47-48 per kg to about Rs 62 per kg in roughly 7-10 days.
- Expected production
- 2025-26 sugar production is estimated at about 30.6 million tonnes, compared with an earlier estimate of 34.3 million tonnes.
- Domestic demand
- Annual domestic demand is estimated at about 28-29 million tonnes, or 280-285 lakh tonnes.
- Ethanol diversion
- The government said about 9% of sugar was diverted for ethanol in 2025-26, down from about 12% in 2022-23; nearly three-fourths of ethanol now comes from grains, mainly maize.
- Government measures
- The government approved duty-free imports of 1 million tonnes of raw sugar, set a 400-tonne dealer stock limit until November 30, and limited bulk consumers to 15 days of consumption from September 1.
- Expected additional supply
- Early crushing around October 15 is expected to provide about 1-1.2 million tonnes of sugar in October, while refinery stocks could add 3-4 lakh tonnes immediately.
Sources
Why are sugar prices rising? Centre rejects ethanol link, cites five reasons behind surge
Sugar Price Surge: Govt Rejects Ethanol Diversion Claims, Blames Low Output, Hoarding & Festive Demand
No ethanol link to sugar price spike; millers jacking up rates, says govt
Hoarding blamed for sugar spike: Centre claims no ethanol link to price surge - Telegraph India
