Sugar Price Hike: Is Ethanol Diversion Driving a 20% Surge in Retail Prices in Just 12 Days?
The retail price of sugar has increased from INR 52 to around INR 62 over the past 12 days, representing a rise of 19-21 percent, and market analysts predict prices will continue climbing in the coming days, raising concerns for the government over domestic sugar supplies and pricing.
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Sugar prices in the country are rapidly increasing due to speculation about its record-low stocks and the approaching festive season, with retail prices rising by approximately 20 percent since August 7 across major cities. The retail price of sugar has increased from INR 52 to around INR 62 over the past 12 days, representing a rise of 19-21 percent, and market analysts predict prices will continue climbing in the coming days, raising concerns for the government over domestic sugar supplies and pricing.
Why Prices Are Rising
Lower production, combined with the government's earlier allowance of sugar exports and the diversion of sugarcane-based feedstock toward ethanol production, are the major factors contributing to the price rise. Sugar Shortage Fears: Government May Curb Sugarcane Use for Ethanol As Prices Hit Record High.
However, the government had recently assured sufficient sugar availability and issued an order imposing stockholding limits on sugar dealers nationwide till November 30, 2026.
Record-Low Stock Projected For This Season
The year-end sugar stock for the current sugar season (October 2025 to September 2026) is projected to hit a record low, said reports. The stock on September 30 is expected to be around 32 lakh metric tonnes (LMT), significantly below the normal required stock of 60 LMT. This would mark the lowest closing stock since 2010, compared to last season's year-end availability of 47 LMT. Sugar Shortage in India? Balrampur Chini Mills Says Current Stock Sufficient Until November.
Monthly sugar consumption in the country stands at around 24 LMT. For the current season, the industry had projected total production of 342 LMT, based on which the government allowed exports of up to 20 LMT in two phases. However, actual production fell short, registering only 308 LMT.
Export Ban Came After Shortfall Became Clear
Of the 308 LMT produced, 28 LMT was diverted for ethanol production, leaving 280 LMT for domestic consumption. Upon realising the lower production figures, the government imposed a ban on sugar exports in May, by which time 8 LMT had already been exported.
A market expert said there is significant speculation among traders and the industry over the exact quantity of sugar available at the end of the season, which is fuelling the price rise, adding that nobody knows the precise figure. They further noted that the industry body had misled the government with projections of higher production, leading to the allowance of exports and ethanol diversion.
(The above story first appeared on LatestLY on Aug 20, 2026 09:25 AM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).
