Retail sugar prices in India have climbed sharply in recent weeks, with the national average rising from ₹48.18 per kg on July 20 to ₹55.70 per kg on August 20, according to data from the Ministry of Consumer Affairs, Food and Public Distribution.
In several cities, including parts of Mumbai and Kolkata, consumers have reported retail rates reaching ₹65–70 per kg, a jump of roughly ₹20 in about a month in some markets. Wholesale and ex-mill prices have also advanced significantly, with reports of rates around ₹5,400–5,750 per quintal in key centres such as Kolhapur.
The timing coincides with rising demand ahead of the festive season, which typically runs from Ganesh Chaturthi through Diwali. Households and sweet manufacturers are already adjusting budgets as the sweetener becomes costlier.
Causes cited by the government
Officials attribute the price increase to a combination of factors rather than any single cause. Domestic sugar production for the current season is now estimated at around 306 lakh metric tonnes (LMT), down from an earlier projection of about 343 LMT by sugarcane-growing states. The shortfall has been linked to Red Rot and Top Borer diseases affecting sugarcane crops, along with waterlogging from excess rainfall in major producing regions.
Global conditions have added pressure. International sugar prices rose from $474 per tonne on June 30 to $552 per tonne on August 20, an increase of more than 16% in under two months, amid an estimated global deficit of around 33 LMT for 2026-27.
Speculation and alleged hoarding by some market participants have also been flagged as contributing to volatility. The ministry has stated that closing stocks are projected to be tighter than in recent years, though it maintains that adequate supplies remain available to meet domestic needs until the new crushing season begins in October.
Ethanol blending?
Claims that higher diversion of sugar or sugarcane for ethanol production (used in E20 petrol blending) is driving the price rise have been firmly rejected by the Centre.
The Ministry of Consumer Affairs said it is ‘incorrect to attribute the recent increase in sugar prices to diversion of sugar for ethanol production.’ Officials noted that the share of sugar diverted for ethanol has declined to around 9% in the 2025-26 season from about 12% in 2022-23. Nearly three-fourths of India’s ethanol output now comes from grains, particularly maize, reducing reliance on sugarcane-based feedstocks.
Political reactions
Opposition leaders have linked the price rise to the ethanol programme. Congress president Mallikarjun Kharge questioned why stocks in the world’s largest sugar producer had fallen to their lowest level in nine years, why exports were halted and duty-free imports of 1 million tonnes approved, and why the policy of diverting sugarcane and grain for E20 ethanol was not being reviewed. He described the situation as the
‘bitterness’ of government policies seeping into the ‘sweetness of sugar’ just before festivals and challenged the government’s self-reliance claims.
Aam Aadmi Party national convenor Arvind Kejriwal earlier blamed the E20 policy, claiming retail prices had risen by nearly ₹20 per kg in about 17 days (from around ₹46 to ₹65 in some references) due to diversion of sugarcane for ethanol. He argued that a policy meant to save foreign exchange on oil imports risked requiring the same spending on sugar imports.
BJP leader Amit Malviya responded to Mr. Kharge’s questions, arguing that import decisions are based on the overall sugar balance (production, consumption, stocks and prices) rather than the E20 programme. He said the production drop was the primary driver and that only a minority of ethanol procurement in the current supply year came from sugarcane juice, syrup or sugar, with the bulk from maize and other grains. Mr. Malviya also noted that India imported sugar in earlier periods, including under previous governments, before the current ethanol blending levels.
Government measures
To stabilise prices and ensure availability, the Centre has taken several steps. The Directorate General of Foreign Trade has permitted duty-free imports of up to 10 lakh metric tonnes (1 million tonnes) of raw sugar under a tariff-rate quota until October 31, 2026, the first such move in nearly a decade. Applications were opened in late August, with preference for mills and refiners that can complete imports promptly.
Stockholding limits have been tightened. Dealers face a 400-tonne ceiling from August 1 to November 30. From September 1, bulk consumers using more than 10 tonnes a month will be restricted to holding stocks equivalent to no more than 15 days of consumption, also until November 30.
Joint central and state teams are conducting physical verification of stocks at mills to check for hoarding. States and mills have been advised to begin the crushing season early, from around October 15, to boost October output significantly.
Union Minister for Consumer Affairs, Food and Public Distribution Pralhad Joshi has reviewed the stock position and emphasised close monitoring ahead of the festive period.