Sugar prices in India have been increasing rapidly for the last few months. According to a report by news agency Reuters, sugar prices in India have increased by 20 percent this month alone.
According to a report by the Department of Consumer Affairs, Government of India, on August 20, the price of sugar in the retail market was Rs 55.7 per kg.
According to the same report, a month ago the price of sugar was Rs 48.18 per kg. Its price on August 20, 2025 was Rs 46.3 per kg.
Market experts say that sugar prices have never gone so high before. He says that due to the effect of El Nino the monsoon remained weak and this has also affected the prices of sugar.
However, according to the official data of the Central Government, the sowing of sugarcane in the country has been almost equal to last year. This is about four lakh hectares more than the average sowing of five years.
The festive season starting from Janmashtami is approaching. In such a situation, to control the rising prices of sugar, the government has banned the export of sugar. Besides, a stock limit has also been imposed on the amount of sugar that wholesale traders can have.
Why are sugar prices increasing?
India ranks second after Brazil in terms of sugar production in the world. According to Indian Government data, there are a total of 703 mills in the country producing sugar from sugarcane juice. These include 335 private, 325 cooperative and 43 government sugar mills.
Sugar production year in India starts from October and ends in September next year. Ketan Patel, vice president of National Federation of Co-operative Sugar Factories Limited, an organization representing sugar mills, says that in the sugar year of 2025-26, sugar production in the country was estimated to be 32 million tonnes (32 billion kilograms), but in reality it was only about 30 million tonnes (30 billion kilograms).
Talking to BBC Gujarati, he said, "Last year there was excessive rainfall, which had an adverse effect on the sugarcane crop. Similarly, saffron disease spread in Uttar Pradesh in the high yielding sugarcane variety named CO-0238."
"Due to both these reasons, sugarcane production and sugar recovery rate i.e. the percentage of sugar obtained from 100 kg of sugarcane came down to below 12 kg. Therefore, sugar production was less than expected."
Ketan Patel said that the consumption of sugar in India is between 26 million tonnes to 28 million tonnes and generally at the end of the year 60 to 70 lakh tonnes of sugar remains as ending stock.
He told BBC Gujarati, "The ending stock at the end of the year 2024-25 was only 50 to 50.5 lakh tonnes. Thus, 2025-26 started with low opening stock and then the production was also slightly less than expected. Weak monsoon is not the only reason affecting sugar production. "
"Yet it seems that people are buying rapidly due to panic buying i.e. fearing further increase in prices." On one hand, the available stock is a little less, it is the festive season and there is concern about rain. On the other hand the demand is high. "As a result, prices have increased."
Is there a sugar shortage?
According to the website of the Indian Sugar and Bio-Energy Manufacturers Association (ISMA), an organization of private sugar mills in India, the sugarcane-based industry in India is the second largest agro-based industry in the country after the textile industry.
According to ISMA, on an average, sugarcane is cultivated in 55 lakh to 60 lakh hectares every year in India. On an average, 45 crore tonnes of sugarcane is produced and this provides employment to about five crore people.
To know what the government believes about the current situation of sugar, BBC tried to contact Nimuben Bambhaniya, Minister of State in the Department of Consumer Affairs, Food and Public Distribution of the Central Government, through phone and message. However, no immediate response was received from them.
But in a press release issued on July 28, the central government had claimed that there is no shortage of sugar in the country. In a press release, the government had said, "It has come to the notice of the government that the recent increase in mill gate prices of sugar is not in line with the current demand and supply situation."
''It has also come to light that hoarding, speculation by some traders, dealers and middlemen and paper trading without actual movement of sugar from the mills have played a role in creating an artificial picture of shortage in the market. "Such transactions have led to avoidable price volatility and increased sugar prices in the mill gate as well as the retail market."
"The government assures consumers that adequate stocks of sugar are available for domestic consumption in the country," the government said in its press release.
When will the prices of sugar decrease?
Ketan Patel says that July, August and September are considered off season of sugar production and this period falls during festivals. Therefore, every year the prices of sugar in the market increase during this time.
He said, "Even though the prices are above Rs 50 now, the reality is that during the season the prices have generally been between Rs 38 to Rs 42. At that price, even the Fair and Remunerative Price (FRP) is not given to the farmers on time."
"This is the reason why some farmers have shifted from sugarcane to other crops, which give returns in three or six months. The benefit to the mills due to increase in market price is that their stock will be sold and they will be able to pay FRP to the farmers on time."
He further said, "New sugar will come in the market from October, hence we will see a decline in prices."
However, Dhanraj Kaila, a major sugar trader from Surendranagar, told BBC Gujarati, "At present there is no shortage of sugar in the market and there is not much stock either. The situation is hand-to-mouth, that is, whatever sugar is coming in the market, it is being sold immediately. The reason for this is that the stock of sugar in the world is also less. On the other hand, 30 lakh tonnes of sugar was diverted to make ethanol and a large amount of sugar was also exported. Is."
He said, "When there are about 1.5 billion consumers of sugar in the country and there is a drought of one or two years, then programs like ethanol blending become risky. There is a fear among the people that due to El Nino there will be no rain and sugar will become more expensive. The result is that people who used to buy five kg of sugar are now buying 50 kg and those who used to buy 50 kg are now asking for 100 kg."
Has sugar become expensive because of ethanol mixed in petrol?
India ranks third in the world in terms of crude oil consumption after America and China. But more than 80 percent of the crude oil used in India is imported from abroad.
To reduce this import, save foreign exchange, increase self-reliance and reduce pollution, the central government had decided in 2018 to increase the amount of ethanol mixed in petrol from 10 percent to 20 percent. This target was to be achieved in 2030, but the government achieved it only in July 2025.
The sugar industry in India comes under government control. The central government decides how much FRP the sugar mills will have to pay for the sugarcane purchased from farmers. The government also decides how much sugar a sugar mill can sell every month and whether sugar can be exported or not.
The government is also the customer that buys ethanol on a large scale in the country and thus the price of ethanol is also indirectly decided by the government.
According to a Reuters report, 30 lakh tonnes of sugar was used to make ethanol in the sugar year of 2025-26. According to the report, this is about 10 percent of the total sugar production in the country.
Apart from sugarcane juice, ethanol can also be made from syrup prepared during sugar making, A-heavy molasses, B-heavy molasses and C-heavy molasses. According to a report, about one-third of the total ethanol produced in the country was prepared from sugarcane.
"Ethanol blended petrol is an important program and it provides liquidity to sugar mills. But the government has been clear that sugar production is always the first priority," a senior official of a major sugar mill told BBC Gujarati on condition of anonymity.
He said, "It is easy to allege that the government did not stop sugar from being diverted for the production of ethanol. But here it is important to remember that the initial estimates of sugar production were quite high. The problem is that we do not have any accurate method or technology available to accurately estimate the production of sugarcane and sugar."
He said, "We should also remember how big a market we are talking about for sugar. Therefore, it cannot be alleged that due to the sugar diverted for the production of ethanol, there is now a shortage of sugar in the country."
