The federal government on Friday rejected claims that diversion of sugar for ethanol production was liable for the latest sharp rise in sugar prices, attributing the rise as an alternative to decrease home output, festive-season demand, weather-related crop harm, tighter international provides and hoarding, PTI reported.
“It’s incorrect to attribute the latest enhance in sugar costs to diversion of sugar for ethanol manufacturing,” the Ministry of Client Affairs, Meals & Public Distribution mentioned in a press release.
The ministry mentioned the share of sugar diverted for ethanol manufacturing has really declined to round 9% within the 2025-26 season from about 12% in 2022-23. Almost three-fourths of India’s ethanol manufacturing now comes from grains, notably maize, it added.
Why are sugar costs rising?
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The rise in sugar costs is attributed to decrease home manufacturing, elevated festive-season demand, weather-related crop harm, tighter international provides, and hypothesis and hoarding by some trade gamers.
The federal government has imposed inventory limits on sugar sellers, allowed duty-free imports of 1 million tonnes of uncooked sugar, and ordered bodily inventory verifications at mills to curb hoarding and guarantee availability.
The federal government clarified that the share of sugar diverted for ethanol manufacturing has decreased, and the primary components for rising costs relate to home provide points and demand reasonably than ethanol manufacturing.
The festive season usually will increase demand for sugar, which exacerbates strain on costs, notably in periods of low provide as a result of crop harm or environmental components.
Measures embody limiting stockholding for bulk shoppers, permitting duty-free sugar imports, and inspiring mills to begin crushing cane earlier to spice up provide in the course of the festive interval.
Retail sugar costs rose to ₹55.70 per kg on August 20 from ₹48.18 per kg on July 20. The federal government attributed the rise to 5 main components.
Decrease home manufacturing: Sugar manufacturing within the present season is anticipated to be round 30.6 million tonnes, under the preliminary estimate of about 34.3 million tonnes made by sugarcane-growing states.
The federal government attributed the shortfall to Purple Rot and High Borer ailments affecting sugarcane, in addition to waterlogging attributable to extra rainfall.
Festive-season demand: Demand for sugar is anticipated to strengthen forward of the festive season, placing further strain on costs.
Climate-related crop harm: Extra rainfall and waterlogging have affected sugarcane output, contributing to the decrease manufacturing estimate.
Tighter international provides: Worldwide sugar costs have additionally risen amid tighter international provides. The federal government estimates a worldwide sugar deficit of about 3.3 million tonnes in 2026-27. Worldwide sugar costs elevated greater than 16% to $552 a tonne on August 20 from $474 a tonne on June 30.
Hypothesis and hoarding: The federal government additionally cited hypothesis and hoarding by some sections of the trade as components contributing to the worth enhance.
What’s authorities doing to manage costs?
To make sure satisfactory home availability and curb the worth rise, the federal government has imposed a inventory restrict of 400 tonnes on sugar sellers nationwide till November 30.
From September 1, bulk shoppers can even be barred from holding shares exceeding 15 days of consumption.
The federal government has permitted duty-free imports of 1 million tonnes of uncooked sugar and ordered bodily verification of shares at sugar mills by joint central and state authorities groups to verify hoarding and synthetic shortage.
The ministry mentioned present home shares are satisfactory to fulfill demand till the brand new crushing season begins in October.
The federal government has additionally suggested states and mills to start crushing from October 15. October sugar manufacturing is anticipated to exceed 1 million tonnes, in contrast with the same old 300,000-400,000 tonnes, which may strengthen provides in the course of the festive season.
Why does the federal government say ethanol is to not blame?
The federal government mentioned India’s ethanol programme has helped deal with structural surpluses within the sugar trade by diverting a part of the surplus sugar manufacturing in the direction of ethanol.
India usually produces 32-34 million tonnes of sugar yearly towards home consumption of round 28-29 million tonnes. In surplus years, extra inventories can lock up working capital at mills and contribute to delays in funds to sugarcane farmers.
The federal government mentioned the ethanol programme has strengthened mill funds and improved funds to farmers. As of August 20, 97% of sugarcane dues for the 2025-26 season had been paid.
It additionally mentioned improved trade funds have decreased the sector’s dependence on authorities assist. Round ₹14,600 crore was offered in subsidies between 2014 and 2021, however no comparable subsidy has been introduced since 2021-22.
