Sugar prices in India have risen sharply in recent months, with prices increasing by 20 percent during August, according to a Reuters report. The Consumer Affairs Department recorded the retail price at 55.7 rupees per kilogram on 20 August, compared with 48.18 rupees a month earlier and 46.3 rupees on 20 August 2025.
The increase comes as the festival season approaches, beginning with Janmashtami. The government has restricted sugar exports and introduced limits on the stocks that wholesalers can hold. It has also said that the country has enough sugar for domestic consumption.
In a press release issued on 28 July, the government said the rise in prices at mill gates did not reflect the current demand and supply situation. It attributed part of the market pressure to alleged hoarding, speculation and transactions recorded on paper without the actual movement of sugar. The department said these practices had created an artificial impression of scarcity and avoidable price volatility.
Industry representatives say the available supply is tighter than usual. Ketan Patel, vice-president of the National Federation of Cooperative Sugar Factories Limited, said sugar production in the 2025-26 sugar year was expected to reach 3.2 crore tonnes, or 32 billion kilograms, but was closer to 3 crore tonnes, or 30 billion kilograms.
He linked the shortfall to excessive rain in the previous year and the spread of red rot disease in Uttar Pradesh among the high-yielding Co-0238 sugarcane variety. These factors reduced both cane production and the sugar recovery rate, which is the quantity of sugar obtained from 100 kilograms of sugarcane.
Patel said annual sugar consumption in India generally ranges from 2.6 crore tonnes to 2.8 crore tonnes. The country usually ends the year with 60 to 70 lakh tonnes in reserve, but the ending stock for 2024-25 was only 50 to 50.5 lakh tonnes. That left the 2025-26 season with a smaller opening stock before production also fell below expectations.
Ethanol production has added to the pressure on supply. Three billion kilograms of sugar was used to make ethanol in the 2025-26 sugar year, equivalent to about 10 percent of total sugar production, according to the report. A major sugar trader also said 30 lakh tonnes had been diverted to ethanol and that substantial exports had taken place.
India reached its target of blending 20 percent ethanol with petrol in July 2025, ahead of the original 2030 target. The policy was intended to reduce crude oil imports, save foreign exchange, support self-reliance and lower pollution. More than 80 percent of India’s crude oil consumption is imported.
The sugar production season runs from October to September. Patel said new sugar would enter the market from October and prices would then decline. He also said panic buying, concerns about rainfall and festival demand were contributing to the current rise.
