Sugar Price Rise Not Due to Ethanol Diversion, Says Centre
Centre rejects link between sugar price rise and ethanol diversion, citing lower output, festive demand, global crunch and hoarding.
The Union government has dismissed suggestions that the recent spike in sugar prices is linked to the diversion of sugar for ethanol production. In a statement, the Ministry of Consumer Affairs, Food & Public Distribution attributed the price rise to a combination of factors, including lower domestic output, increased festive-season demand, tighter global supplies, and speculative hoarding by some industry players.
Retail sugar prices climbed to Rs 55.70 per kg on August 20, up from Rs 48.18 per kg a month earlier. The government noted that domestic production for the current season is now estimated at around 30.6 million tonnes, significantly lower than the initial estimate of 34.3 million tonnes. Crop damage from Red Rot and Top Borer diseases, along with waterlogging from excess rainfall, have been cited as key reasons for the shortfall.
To improve availability and curb price pressures, the government has imposed a nationwide stock limit of 400 tonnes on sugar dealers until November 30. From September 1, bulk consumers will be barred from holding stocks exceeding 15 days of their consumption needs. Additionally, duty-free imports of 1 million tonnes of raw sugar have been approved, and joint central-state teams will physically verify mill stocks to check hoarding.
The ministry also pointed out that the share of sugar diverted for ethanol has actually declined to around 9% in the 2025-26 season from about 12% in 2022-23. Nearly three-fourths of India's ethanol production now comes from grains, particularly maize. The government defended the ethanol programme, stating it has helped mills manage surpluses, strengthen finances, and improve farmer payments.
On the global front, a projected sugar deficit of 3.3 million tonnes in 2026-27 has pushed international prices up by over 16% to USD 552 per tonne. The government has advised mills to begin crushing from October 15, which is expected to boost supplies during the festive period. It maintains that current sugar availability is sufficient to meet domestic demand until the next crushing season begins.