Sugar Prices: Government Says Ethanol Is Not the Reason

The government attributed the rise in sugar prices to lower production, crop diseases, heavy rainfall and stronger demand rather than ethanol production

There has been a huge rise in Sugar Prices in India before the arrival of the festive season, and it is natural that many people would wonder about the reasons for the price hike. The government has finally explained that the Ethanol Production is not the cause of the latest price hike.As per the statement issued by the government, the fall in sugar production, the destruction of sugarcane crops due to diseases and excessive rainfall, and the rise in domestic demand are the main reasons for the price hike.The government has dismissed the allegations made against it, saying that there has been a decrease in the share of sugar used for ethanol production.

Price of Sugar Increases from ₹48.18/kg to ₹55.70/kg

According to the government statistics, the prices of sugar have seen a significant increase in just one month. The price of sugar on July 20 was ₹48.18/kg, but the price had shot up to ₹55.70/kg by August 20.With the upcoming festival season when there is an increase in the consumption of sweet and food products, the sharp rise in the price of sugar is posing concerns.The government has stated that it is keeping a close eye on the market situation.

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Ethanol Distillation Is Not the Cause for Price Increase

In a statement made by the Ministry of Consumer Affairs, it is noted that connecting the recent increase in Sugar Prices to Ethanol Distillation would not be accurate.Based on official statistics, the percentage of sugar which has been allocated for ethanol distillation has decreased from about 12% in 2022-23 to around 9% in 2025-26.It is also reported that there has been an alteration in the feedstock used for ethanol distillation, with about 75% of India's ethanol production coming from grains such as maize.Therefore, officials have suggested that the diversion of sugar to ethanol is not the main cause of the shortage and price increase.

Expected Sugar Production to Be Lower Than First Estimated Amount

One other important factor responsible for the increase in Sugar Prices is low production levels, below what was first expected during the current season.As per government estimates, the expected sugar production this season is 306 lakh tonnes, much lower than the first estimated level of 343 lakh tonnes.Sugarcane cultivation has faced disease problems like red rot and top borer. Excessive rain has also resulted in the water logging of some sugarcane fields, which has affected their production levels.However, despite the lower production estimates, the government says there is enough sugar stock for domestic consumption till the start of the next crushing season in October.

Increase in Prices of Sugar Worldwide Too

The rise in Sugar Prices is not confined to India alone. Even global markets are witnessing supply worries due to weather problems affecting sugar output in different areas.It is estimated that the world will witness a deficit in its sugar supply by around 3.3 million tonnes in 2026-27.World sugar prices have also risen dramatically. The price was estimated to be around $474 per tonne on June 30 but rose to $552 per tonne on August 20, registering a rise of over 16%.This has been yet another factor adding to the worry about domestic sugar prices.

Benedicts of the Ethanol Production Scheme for Sugar Mills

Apart from this, the government has also brought out the benefits of the Ethanol Production scheme for sugar mills.In general, India produces about 320-340 lakh tonnes of sugar per year, while the domestic requirement is 280-290 lakh tonnes. In years of good production, extra sugar tends to pile up and blocks the working capital of sugar mills.Producing extra sugar into ethanol acts as another source of income for sugar mills. According to the government, by August 20, 97% of the sugarcane bills for the 2025-26 season were paid to the farmers.

Steps Taken by Government to Combat Hoarding

The government has realized the fact that the hoarding done by some sugar mills and traders was one of the reasons behind the price hike.In order to stop the creation of shortages artificially, there have been some restrictions on the amount of sugar stocks for the sugar dealers. In the period from 1st August till 30th November, the stock limit for the dealers would be 400 tonnes. From 1st September, bulk consumers won’t be allowed to hold more than 15 days’ consumption.

10 Lakh Tons of Raw Sugar to be Imported

In order to increase market availability, the government has permitted the import of 10 lakh tons of raw sugar without any duty.

The government has instructed the sugar mills as well as states to start the crushing process from October 15. It is expected that the amount of sugar produced in October would exceed 3-4 lakh tons normally produced in one month and may even reach 10 lakh tons.With the festive season approaching, the government believes that such measures will help increase availability and control Sugar Prices in the market.It has been claimed that they will continue monitoring sugar stock as well as prices in the market. Any kind of hoarding and unjustified price rise will be dealt with. Timely payments of sugarcane dues to farmers will be ensured.