India has adequate sugar stocks, while imports and fresh production are expected to ease prices after a sharp recent rise
India is not facing a sugar shortage and prices are expected to cool in the coming days as adequate stocks, imports and fresh supplies from the new crushing season improve availability, the Indian Sugar Mills Association (ISMA) said on Monday.
ISMA President Niraj Shirgaokar said the recent surge in sugar prices was driven largely by speculative stocking and weather-related production setbacks, rather than an outright shortage of sugar in the country.
“India does not have a sugar shortage and the supply situation is fundamentally strong,” Shirgaokar said, adding that domestic stocks are sufficient to meet consumption as well as festival demand.
The assessment comes days after the Centre allowed duty-free imports of up to 1 million tonnes of raw sugar, in a major policy shift for India and its sugar market.
Retail and wholesale sugar prices have risen sharply in recent weeks. Average retail prices increased from around Rs 48.18 per kg on July 20 to Rs 55.70 per kg on August 20, according to government data. Prices in some markets have climbed to Rs 60-80 per kg.
More from BusinessThe government’s decision to allow imports was aimed at preventing a further tightening of supplies ahead of the festive season, rather than signalling an immediate physical shortage.
Why did India allow sugar imports?
The Centre on August 20 authorised duty-free imports of 1 million tonnes of raw sugar under the Tariff Rate Quota (TRQ) route, with the window open until October 31, 2026.
The move is significant because India, one of the world’s largest sugar producers, has not needed to turn to large-scale imports for nearly a decade.
The immediate concern has been the narrowing of domestic inventories after a weaker-than-expected 2025-26 crop, rising consumption and diversion of sugarcane-based feedstock towards ethanol.
India’s sugar output projections were revised down during the season following weather-related disruptions and crop disease in some major sugarcane-growing states.
The National Federation of Cooperative Sugar Factories (NFCSF), however, has retained its estimate of 279 lakh tonnes of sugar production for the 2025-26 season, excluding around 24 lakh tonnes of sugar equivalent diverted towards ethanol production.
The federation estimates opening stocks for the 2026-27 season at around 35 lakh tonnes.
With domestic consumption at roughly 22 lakh tonnes a month, the industry expects a substantial portion of the opening inventory to carry over into November. Fresh supplies should then start arriving as mills begin crushing the new crop.
Is E20 behind India’s sugar import decision?
The government’s push towards ethanol blending has become an important part of the debate over India’s sugar availability.
India achieved its earlier 10 per cent ethanol-blending target ahead of schedule and has since moved towards its 20 per cent blending target. E20 became mandatory at retail outlets from April 1, 2026, creating sustained demand for ethanol feedstock.
Sugar mills can produce ethanol from sugarcane juice, sugar syrup and molasses. Diverting these feedstocks towards ethanol means that part of the sugar equivalent that could otherwise have been produced as crystal sugar does not enter the food market.
Around 24 lakh tonnes of sugar equivalent is estimated to have been diverted for ethanol production during the 2025-26 season, according to the NFCSF estimate.
This has fuelled a debate over whether India’s energy security policy has contributed to tighter sugar inventories at a time when the sugarcane crop has also faced weather-related setbacks.
However, the industry and the government have maintained that ethanol diversion alone cannot explain the recent increase in sugar prices.
The Centre has also pointed to speculative activity and stocking as important factors behind the sharp price increase. It has taken measures, including stockholding limits, to prevent excessive hoarding during the period of elevated demand.
The ethanol programme has simultaneously delivered benefits to sugar mills and farmers by providing an alternative market for sugarcane-derived products, while helping India reduce its dependence on imported crude oil.
India still has adequate sugar stocks
The industry’s latest assessment is that the country has enough sugar to navigate the immediate period of elevated demand.
The NFCSF expects around 15-20 lakh tonnes of sugar to be carried into November, when early crushing begins to add fresh supplies.
Naiknavare said some imported sugar could reach India before October 15, although the exact volume will depend on the approval and logistics process.
The arrival of shipments will depend on Directorate General of Foreign Trade (DGFT) approvals, allocation of import quantities, letters of credit and shipping schedules.
Brazil is currently the principal source of sugar imports for India, while Thailand is facing supply constraints, Naiknavare said.
He also indicated that the government could consider allowing sugar shipments already in transit to arrive after the October 31 deadline.
“I believe they would be willing to consider shipments arriving after that date too. I don’t think it will be treated as a hard and fast rule,” he said.
What caused the price surge?
The recent rally has been unusually sharp. Wholesale ex-mill prices in major sugar-producing markets have risen significantly, while retail prices have moved higher in several states.
ISMA attributed the spike to a combination of speculative stocking, weather-related production problems and concerns over supplies ahead of the festive season.
The government has also argued that the price increase is not evidence of a structural shortage.
This distinction is important because India is moving from a period of ample sugar availability and exports to a temporary phase in which imports are needed to strengthen the inventory cushion.
The government had already prohibited sugar exports in May 2026 as domestic prices came under pressure. The latest import decision is effectively the other side of that policy response: restricting outward shipments while adding supplies from overseas.
Why the import decision matters
India’s sugar market has undergone a sharp reversal over the past decade.
The country moved from managing large surpluses to becoming one of the world’s biggest sugar exporters. In the 2021-22 season, India exported a record around 11 million tonnes of sugar.
The expansion was supported by strong sugarcane production and policy support for mills and farmers. Ethanol also emerged as an important alternative outlet for sugar mills, helping the industry manage periods of surplus production.
The current season is different.
Weather disruptions, crop disease and lower production have reduced the margin available for both domestic consumption and strategic stocks. At the same time, the E20 programme has created sustained demand for ethanol feedstock.
That combination has made inventory management more important.
The government’s 1 million-tonne duty-free import window is therefore intended to supplement domestic availability during a period when stocks are tighter, rather than to address an immediate nationwide shortage.
When could sugar prices fall?
The industry expects prices to moderate as speculative buying subsides and supplies improve.
The 1 million tonnes of permitted imports should add to availability during the September-October period. Early crushing in the new season is also expected to bring additional domestic sugar into the market from October.
That could ease the pressure on wholesale prices first, with retail prices expected to respond subsequently.
For consumers, the immediate message from the industry is that the current price spike should not be interpreted as evidence that India is running out of sugar.
India has adequate stocks, fresh domestic production is approaching and imports have been opened to provide an additional cushion.
The key question now is how quickly imported sugar reaches the domestic market and whether the combination of imports, new-season production and anti-hoarding measures is enough to bring prices back towards normal levels before the peak festive demand period.
With inputs from agencies.
