India’s sugar market is caught in an uncommon disaster. The nation has sufficient sugarcane within the fields, a whole lot of distilleries constructed to feed its bold ethanol programme, and a authorities that has already restricted exports to guard home provides. But sugar prices are climbing to record levels, forcing New Delhi to think about an possibility it has largely averted for many years: importing sugar. Consultants largely blame the disaster on the diversion of sugarcane for manufacturing of ethanol.
As a precursor to importing sugar, India, based on a report by Reuters on Tuesday, was planning to take away the 100% import responsibility that had been in place on the commodity.
The timing of the sugar worth rise may hardly have been harder. India’s pageant season, when demand for sweets and processed meals rises sharply, is approaching. On the identical time, a rising share of sugarcane is being diverted in direction of ethanol manufacturing as India pushes in direction of its E20 goal, making a tough coverage trade-off between gasoline safety and meals costs.
Wholesale sugar costs in Kolhapur, Maharashtra, one among India’s key sugar buying and selling centres, have risen almost 20% because the starting of August to a file Rs 5,350 per 100 kg. In response to Client Affairs Division information, the all-India common retail worth was at Rs 52.3 per kg on Tuesday (August 18).
In some markets, the spike has been significantly sharper. Retail sugar costs in Punjab have touched round Rs 65 per kg, whereas costs in elements of Mumbai, Bhopal and different markets have moved in direction of Rs 58–63 per kg.
And with Ganesh Chaturthi, Dussehra and Diwali forward, the federal government is racing to make sure that a sugar scarcity doesn’t turn out to be a festive-season inflation downside.
Consultants are warning {that a} stability must be maintained that the Ethanol Blended Petrol programme does not find yourself disturbing meals costs, as is going on within the case of sugar.
SUGAR’S PRICE HIKE IS AN IMPACT OF ETHANOL RUSH
On the coronary heart of the issue of sugar’s excessive worth is a provide deficit. India has more and more diverted sugarcane in direction of ethanol because it seeks to cut back its dependence on imported crude oil and obtain its E20 goal.
The government has pushed to build dozens of distilleries in recent times for this objective, taking ethanol manufacturing capability to round 1,822 crore litres a 12 months throughout 499 websites by mid-2025, based on the All India Distillers’ Affiliation (AIDA).
Sugarcane varieties round 30–35% of ethanol feedstock, with the rest coming from maize and rice, based on information shared by AIDA with India Right this moment Digital.
That diversion has penalties for the sugar market.
“A diversion of sugarcane to provide ethanol has resulted in excessive costs of sugar in India,” agriculture skilled and Lucknow College professor Sudhir Panwar instructed India Right this moment Digital.
Panwar argues that the sugar market shouldn’t have tightened to the extent it has and suspects that components past manufacturing are additionally contributing to the spike.
“The market forecast for sugar wasn’t that unhealthy, which additionally alerts market manipulation by sugar stockists and retailers,” he stated, including, “The costs would have been underneath management if cane hadn’t been diverted to ethanol manufacturing.”
His essential concern is that India’s gasoline coverage shouldn’t come on the expense of meals costs.
“Sugarcane diversion in direction of ethanol should not be at the price of sugar, and should not improve meals costs. We’d like appropriate estimates of sugarcane manufacturing and sugar necessities of India, and the worldwide scenario and sugar costs,” Panwar, a former member of the Uttar Pradesh’s Planning Fee, instructed India Right this moment Digital.
The availability scenario has additionally been affected by crop illness.
“Sugarcane productiveness and sugar restoration dipped, particularly in Uttar Pradesh, in 2025-26 due to crop illness,” Panwar added.
This, regardless of the sugarcane cultivation acreage having elevated.
Sugarcane acreage in July – even because the nation witnessed a deficit of rainfall — was 1.5% increased than different crops like paddy, pulse, cotton and oil seeds, than in the course of the corresponding interval final 12 months, based on a report in The Occasions of India on Tuesday.
That makes the query extra sophisticated that if acreage has elevated, why are provides nonetheless tight?
Panwar believes a part of the reply lies in how a lot cane is in the end transformed into sugar and the way a lot is diverted to ethanol.
“When the federal government launched estimates of cane and sugar manufacturing, the scenario wasn’t so critical. Which means both the statistics weren’t proper, or the market was manipulated or the diversion to ethanol was disbalanced,” he stated.
WHY IS INDIA CUTTING IMPORT DUTY ON SUGAR?
The federal government’s coverage response highlights how sharply the scenario has modified. India is the world’s second-largest sugar exporter after Brazil. It has been exporting sugar since 1960 and at its peak shipped greater than 12 million tonnes in 2021-22.
However the nation’s export coverage has steadily tightened as the federal government prioritised home availability.
For the 2025-26 sugar season, India permitted an export quota of round 2 million metric tonnes, a fraction of the greater than 12 million tonnes exported in 2021-22.
India then went additional in 2026, banning sugar exports with immediate effect from May 13 till September 30, as the federal government sought to guard home provides, management costs and put together for uncertainty over manufacturing and world commodity markets.
The ban is important as a result of India had beforehand relied on export restrictions, quotas and quantitative limits fairly than imposing a blanket prohibition on common shipments for an prolonged interval. Even throughout earlier restrictions, smaller quota-based and preferential shipments, together with to the US and European Union, continued.
Regardless of these measures, home costs have continued to climb.
India exported 2,01,547 tonnes of sugar via February within the present 2025-26 advertising and marketing 12 months, with the United Arab Emirates rising as the highest vacation spot, based on the All India Sugar Commerce Affiliation (AISTA).
Now, based on reviews, the federal government is contemplating the following step of reducing the import responsibility on sugar. The transfer may enable abroad sugar into India for the primary time in almost a decade, doubtlessly easing home provides simply because the pageant season begins.
“Native provides of sugar are tight. Solely imports might help improve provides and convey down costs in the course of the pageant season,” Ashok Jain, president of the Bombay Sugar Retailers Affiliation, instructed information company Reuters.
India’s return to the worldwide sugar market may have penalties on its borders. As one of many world’s greatest sugar customers, Indian imports may help benchmark sugar costs in London and New York, whilst they assist New Delhi comprise costs at dwelling.
WHY GOVERNMENT IS SUDDENLY IN A PANIC MODE ON SUGAR
The present spike didn’t emerge in a single day. Indian retail sugar costs have broadly risen from round Rs 40–45 per kg in early 2023 to greater than Rs 50 by August 2026, though costs fluctuate significantly by state, high quality and market.
The acceleration has are available in latest months.
By mid-August 2026, the all-India every day common had reached round Rs 51.7–52.3 per kg, representing a rise of roughly 7–8% in a month and round 12–13% year-on-year from about Rs 46.3 per kg in mid-August 2025.
However the present surge, coming proper forward of the festive season, has pressured the Centre to behave.
The authorities subsequently are contemplating extra than simply imports. Officers are additionally weighing restrictions on the quantity of sugar that bulk merchants can maintain, in an try to stop stockpiling and hoarding from worsening the scarcity.
Earlier, officers had additionally been contemplating one other intervention of decreasing the quantity of “sugarcane diverted in direction of ethanol and prioritising sugar manufacturing as an alternative”. Reuters reported on August 10 {that a} resolution on the difficulty could possibly be taken by the tip of September.
The federal government ought to work out the food-versus-fuel trade-off in the case of mixing ethanol with petrol, steered India’s Chief Financial Advisor V Anantha Nageswaran in an opinion piece he co-wrote for The Indian Categorical.
The federal government ought to maintain at E20 and never go for increased blends “till India has completely costed the food-versus-fuel trade-off, fairly than assuming it away,” he wrote within the piece printed on August 17.
GOVERNMENT FACES POLITICAL HEAT OVER SUGAR CRISIS
The worth rise of sugar can also be starting to generate political criticism. Activist and founding father of Crew Bharat, Tehseen Poonawalla alleged that the diversion of cane in direction of ethanol manufacturing had contributed to the disaster and questioned the beneficiaries of the coverage.
“India exported an enormous quantity of sugar. However because of the diversion of cane to ethanol manufacturing, the scenario has turned to India banning exports. The diversion spiked the costs of sugar and now the federal government is planning to take away import responsibility on sugar,” Poonawalla stated in a video message on X.
Poonawalla additionally alleged that politicians and their households had benefited from the scenario.
He introduced that his outfit Crew Bharat, which has been protesting and holding talks with the government over speedy implementation of E20 petrol, would maintain a protest and starvation strike at New Delhi’s Jantar Mantar on August 22 and 23.
For the federal government, the quick process is to make sure that a staple commodity doesn’t turn out to be prohibitively costly simply as India’s greatest festival-shopping season begins.
However the bigger coverage query is significantly tougher for the authorities to take care of.
How a lot sugar ought to India produce for its folks, and the way a lot cane ought to it divert into its gasoline tanks to fulfil its bold undertaking?
The E20 programme guarantees decrease oil dependence and higher vitality safety. Sugar exports deliver overseas alternate and help the farm economic system. However when cane is diverted to ethanol and sugar costs climb, the trade-off reaches the family kitchen. The centre is now weighing imports, inventory limits, export restrictions and presumably a rethink of cane diversion.
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