Winning Bizness Desk

Mumbai.Sugar prices rise 19% in 50 days as India turns to imports amid tightening stocks

Sugar prices have risen 19% in the past 50 days to Rs 55.7 a kg, the government’s all-India average, while retail prices in several cities have touched Rs 65-70. With festive demand rising and stocks falling to a three-decade low, the government has approved imports of 1 million tonnes of sugar.

Why sugar prices are rising sharply now

Sugar prices had remained largely stable for nearly two years before starting to rise sharply in June 2026. Demand typically increases between August and November as the festive season drives consumption of sweets, confectionery and processed food.

This year, however, the rise in demand has come at a time when stocks are unusually low. The sugar season begins on October 1, while annual domestic consumption is estimated at 26-28 million tonnes. Normally, 6-7 million tonnes remain in stock by September 30.

Reuters estimates that mills may have only 3.5 million tonnes left when the new season begins on October 1, the lowest level in three decades. The corresponding stock at the end of 2025-26 was around 4.7 million tonnes.

Four reasons behind the shrinking sugar stocks

Experts point to four major reasons for the shortage:

• Excess rainfall damaged the sugarcane crop last year, pushing the sugar recovery rate below 12%. Total sugar production was around 30 million tonnes against an estimate of 32 million tonnes.
• A larger share of cane was diverted towards ethanol under the government’s blending policy.
• Sugar continued to be exported even as domestic stocks were tightening.
• Festive-season demand has encouraged bulk buyers to build stocks, adding further pressure on prices.

Ethanol and exports have squeezed supplies

According to ICRA, sugar production in 2025-26 was initially estimated at about 31 million tonnes, but net sugar production came to only 28 million tonnes. Domestic consumption is estimated at 28.3 million tonnes. Around 3.1 million tonnes of sugar equivalent was diverted towards ethanol production.

Shankar Thakkar of the Confederation of All India Traders said traders had been warning for three years that diverting cane towards ethanol could create supply problems.

Exports have also reduced domestic availability. The Centre approved exports of 1.5 million tonnes in November 2025 and another 500,000 tonnes in February 2026. Although exports were stopped in May after prices began rising, around 800,000 tonnes had already left the country.

Prices may rise further before fresh crushing

The Bombay Sugar Merchants Association president Ashok Jain said mills were releasing sugar cautiously ahead of the festive season because they expect prices to rise further. An industry official said the country should ideally have a closing stock of about 6 million tonnes, equivalent to roughly three months’ consumption.

The new sugarcane crop will be crushed from November, which is when supplies are expected to improve. Until then, the market will remain dependent on existing stocks, leaving room for further price increases.

Government takes four steps to contain prices

The government announced four measures on August 20 to improve supplies and curb hoarding:

• Stock limits for large bulk users consuming more than 10 tonnes a month have been cut to 15 days.
• Large suppliers and dealers who do not use sugar themselves can hold a maximum of 4,000 quintals, or about 4,000 sacks.
• Mills have been allowed to sell an additional 50,000 tonnes, with sugar sold to traders required to leave factories within seven days.
• The government has approved duty-free imports of 1 million tonnes of raw sugar until October 31, 2026. Normally, sugar imports attract a 100% duty.

Can imports bring down wholesale prices?

Reports suggest the imports may have only a limited impact on wholesale prices, with the 1-million-tonne shipment potentially reducing prices by around Rs 500 per quintal.

The government may also direct mills to use more molasses for sugar production rather than ethanol during the crushing season, according to reports.

India goes from sugar exporter to buyer

India is the world’s second-largest sugar producer and exporter after Brazil. It exported a record 11 million tonnes in 2021-22, but exports have declined steadily in recent years.

India has rarely needed imports. The last major import was in 2017, when around 2.4 million tonnes of sugar was brought into the country. In a supply crunch, India generally imports raw sugar from countries such as Brazil and refines it at domestic mills before selling it in the local market.

Thakkar said sourcing sufficient quantities of raw sugar before November would be difficult because very few countries export it in large volumes. The immediate challenge, therefore, is to bridge the supply gap until the new crushing season begins.