Sugar prices are rising sharply across India, with wholesale rates in some markets climbing to around ₹7,100 per 100 kg, or ₹71 per kg. Retail prices have also jumped in several cities, just as demand is expected to increase during the upcoming festive season.
The price rise is not because of one single factor. Lower sugar production, diversion of sugarcane towards ethanol, tight stocks, weather concerns and higher festive demand are all putting pressure on the market.
Ethanol Is One Reason Behind The Sugar Price Rise
One of the important factors attracting attention is India’s ethanol programme.
Sugarcane can be used either to produce sugar or to make ethanol. When more cane is diverted towards ethanol, less is available for sugar production.
For the 2025-26 sugar year, around 3 million tonnes of sugarcane equivalent is estimated to have been diverted towards ethanol, according to Moneycontrol. About 0.9 million tonnes of this was linked directly to the E20 blending programme.
Agriculture expert and Lucknow University professor Sudhir Panwar told India Today Digital: “A diversion of sugarcane to produce ethanol has resulted in high prices of sugar in India.”
Panwar also said: “The prices would have been under control if cane hadn’t been diverted to ethanol manufacturing.”
However, ethanol is not the only explanation for the current surge.
Sugar Stocks Have Become A Major Concern
India’s sugar production has fallen below earlier expectations. The New Indian Express reported that production for the current season was around 308 lakh metric tonnes, compared with an earlier industry projection of 342 lakh metric tonnes.
Of the sugar produced, around 28 lakh metric tonnes was diverted towards ethanol, leaving about 280 lakh metric tonnes for domestic consumption.
The expected closing stock is also a concern. Estimates cited by The New Indian Express put sugar stocks at around 32 lakh metric tonnes by September 30, compared with a normal requirement of around 60 lakh metric tonnes.
This is important because India consumes roughly 24 lakh metric tonnes of sugar every month.
Why Is Sugar Reaching ₹71 Per Kg In Some Markets?
The ₹71 figure does not mean every Indian consumer is paying ₹71 per kg.
It refers to prices reported in some markets at the wholesale level. Prices differ considerably between states, cities and markets depending on supply, transportation, quality and margins.
In Mumbai, for example, sugar prices were recently reported at around ₹58 per kg, after rising ₹8 in a week.
India Today reported that retail sugar prices in parts of Punjab had reached around ₹65 per kg, while some markets in Mumbai and Bhopal were approaching ₹58-63 per kg.
Festive Season Could Push Demand Higher
Another major reason for concern is timing.
Ganesh Chaturthi, Dussehra and Diwali are approaching. During this period, demand for sugar normally rises because households buy more sweets and businesses such as sweet shops, bakeries and food manufacturers increase production.
That means the market is facing a difficult combination: lower available stocks at a time when demand is expected to rise.
Experts Warn About The Ethanol-Sugar Balance
Vivek Saragi, Chairman and Managing Director of Balrampur Chini Mills, said: “In this environment, maintaining the right balance between sugar availability and ethanol diversion will be important for stable prices and healthy industry economics.”
E.I.D.-Parry COO Ashiq J also said: “Obviously, it makes sense to produce more sugar at this current pricing.”
These comments show how the economics have changed. With sugar prices now high, mills have a stronger financial incentive to produce sugar rather than divert as much feedstock towards ethanol.
Government Takes Action
The Centre has already taken several steps to prevent the price increase from becoming worse.
Most recently, the government allowed 1 million tonnes of raw sugar to be imported duty-free until October 31. The imported raw sugar will have to be refined before it can enter the domestic white-sugar market.
The government has also introduced stockholding restrictions in an attempt to prevent excessive stockpiling and speculation.
Will Sugar Prices Fall?
The government’s import decision could increase supplies and ease some pressure on prices. However, imported sugar will take time to arrive, while the festival season is approaching.
The bigger question is whether India can maintain its ambitious ethanol programme while ensuring enough sugar remains available for domestic consumers.
As Chief Economic Adviser V Anantha Nageswaran argued in an opinion piece cited by India Today, India should remain at E20 until it has properly assessed the “food-versus-fuel trade-off”.
For consumers, the immediate sugar-price problem is therefore a combination of tight stocks, lower production, ethanol diversion, weather concerns and rising festive demand rather than ethanol alone.
