Explained | Sugar prices are soaring — that's what's causing the sudden increase in

Sugar prices in India have reportedly jumped nearly 40% in the past two months, with retailers selling soluble carbohydrates at ₹65 per kg on Thursday. The rise comes as demand rises ahead of the upcoming festive period, the BBC reported. E-commerce platforms such as Blinkit, Zepto, Swiggy and Instamart have introduced sugar purchase limits in several markets, with some retailers allowing customers to buy only 3-5 kg of sugar at a time.

The opposition blames the spike in sugar prices on the diversion of sugar cane to ethanol production and continues its criticism of the government’s ethanol blending program. However, farmers’ groups claimed that big traders had artificially raised prices ahead of the holidays. Meanwhile, the government said it was closely monitoring the situation and attributed the increase to a combination of factors.

Read also | Crop loss or ethanol abuse: what affects sugar prices?

Why are sugar prices rising?

The government attributes the increase to five main factors.

Lower domestic production: Sugar production in the current season is expected to be around 30.6 million tonnes, down from the original estimate of about 34.3 million tonnes produced by sugarcane-growing states.

The government attributed the shortage to sugarcane diseases Red Rot and Top Borer, as well as waterlogging caused by excessive rainfall.

Demand for the holiday season: Demand for sugar is expected to strengthen ahead of the festive season, putting further pressure on prices.

Crop damage caused by weather: Excessive rainfall and waterlogging affected sugarcane production, contributing to the lower production estimate.

Tighter Global Delivery: International sugar prices also rose amid tighter global supplies. The government estimates the global sugar deficit in 2026-27 to be around 3.3 million tonnes. International sugar prices rose more than 16% to $552 per tonne on 20 August from $474 per tonne on 30 June.

Speculation and hoarding: The government also cited speculation and hoarding by some sections of the industry as contributing factors to the price hike.

How much sugar is used to make ethanol?

According to an August 25 Crisil Intelligence release, the amount of sugar going into ethanol production has increased substantially over the past five years. Sugar diverted to ethanol rose from just 0.8 million tonnes (mt) in the 2019-20 sugar season to more than 3 million tonnes in 2025-26, a nearly four-fold increase. This reduction in available sugar, along with a production deficit and higher costs of sugarcane due to increased support prices for farmers, contributed to a sharp rise in sugar prices.

However, the sugar industry disputed this assessment. She pointed out that nearly 75% of ethanol production now comes from feedstocks such as corn and surplus rice, while sugar-based sources account for only about 25%. In a statement on August 24, the Indian Sugar and Bioenergy Manufacturers Association (ISMA) said the ethanol blending program has also improved the financial health of sugar mills and enabled them to pay sugarcane farmers on time.

Read also | Swiggy Instamart, Blinkit limit pre-holiday shopping

What steps has the center taken to bring down sugar prices?

In a bid to reduce prices, the Center has allowed the import of 10 million tonnes of raw sugar till October 31. It also introduced stock limits for retailers and large wholesalers, including beverage manufacturers. Meanwhile, sugar exports had already been banned for several months before, news agency PTI reported.

How much sugar will be available this year?

The Indian Sugar Mills Association (ISMA) estimates that net sugar production in India, after accounting for the amount diverted to ethanol, will be around 279 million tonnes in the 2025-2026 marketing season, which runs from October to September. The country entered the season with an opening stock of 50 million tonnes.

How does production compare to domestic demand?

The annual consumption of sugar in India is estimated at 280 to 285 thousand tons. Before the government imposed the export ban, around 8 million tons of sugar were shipped overseas.

What is the expected ending inventory?

ISMA expects the country to end the marketing year in September with around 35 million tonnes of sugar in storage.

How much sugar is converted to ethanol?

The association estimates that approximately 30 million tons of sugar will be diverted to ethanol production during the current marketing year. This is part of an estimated gross sugar production of 309 million tonnes.