India turns to sugar imports as prices surge

For the first time in nearly a decade, India recently decided to allow imports of duty-free raw sugar until October in order to contain surging prices and ensure adequate availability in the domestic market.

The government argued that duty-free imports of sugar have been allowed as a "precautionary" measure to guard against a possible further rise in prices in view of the coming festival season, when demand would go up considerably.

Sugar prices in India, the world's largest consumer of the sweetener, increased in a month from Rs 48.18 per kg on 20 July to Rs 55.70 per kg on 20 August, the government acknowledged.

The government has rejected criticism that the increase in sugar prices is due to diversion of sugar for ethanol production.

In fact, the share of sugar diverted for ethanol has declined from around 12% in 2022-23 to around 9% in 2025-26. Moreover, nearly three-fourths of the ethanol produced in the country now comes from grains, particularly maize, said the Ministry of Consumer Affairs, Food & Public Distribution on Friday.

India normally produces around 320-340 lakh tonnes of sugar annually, against domestic consumption of around 280-290 lakh tonnes. When there is surplus production, excess stocks block the funds of sugar mills and can delay payments to sugarcane farmers, it pointed out.

Diversion of excess sugar towards ethanol has helped address this structural problem and improved the financial health of sugar mills, maintained the Ministry.

As on 20 August 2026, 97% of sugarcane dues for the 2025-26 sugar season had already been paid to farmers, it said, adding that the improved financial position of sugar mills had reduced their dependence on government subsidies.

While around Rs 14,600 crore of subsidy was provided to the sugar industry between 2014 and 2021, no such subsidy has been announced since 2021-22.

The Ministry said the increase in sugar prices was due to a combination of factors, including lower-than-expected domestic production, increased demand ahead of the festive season, weather-related damage to the sugarcane crop, tightening global sugar supplies and speculation and hoarding by some sections of the industry.

India's sugar production during the current season is expected to be around 306 lakh tonnes, compared with the initial estimate of around 343 lakh tonnes by key sugarcane-growing states, according to official figures.

Production has been affected by disease in sugarcane as well as waterlogging caused by excess rainfall.

But despite the lower-than-estimated production, adequate sugar stocks are available in the country to meet domestic demand until the new crushing season begins in October.

The government also points out that international sugar prices have risen sharply from $474 per tonne on 30 June to $552 per tonne on 20 August, an increase of over 16% in less than two months.

Speculation and hoarding by some sugar mills and traders have also contributed to the recent price increase. Several steps have therefore been taken, including the imposition of a stock limit of 400 tonnes on sugar dealers across the country from 1 August to 30 November.

States and sugar mills have been advised to begin crushing from 15 October, and this is expected to raise October sugar production from the usual 3 lakh tonnes to more than 10 lakh tonnes, the Ministry says.