Sugar has suddenly become much more expensive across India, adding fresh pressure to household budgets just as the festive season begins. Retail prices have crossed ₹65 per kilogram in several markets, while some areas have reported rates as high as ₹75 per kilogram.
Government data showed the average retail price at ₹63.05 per kilogram on August 24, up 29% from ₹48.73 a month earlier. The model price, or the rate most commonly reported across markets, stood at ₹65 per kilogram.
How India’s sugar outlook changed
At the beginning of the 2025-26 sugar season, India appeared to be heading towards a comfortable surplus. Early estimates suggested strong production, allowing the government to approve an export quota of two million tonnes.
The situation changed as the season progressed. Excessive rainfall, waterlogging, pests and crop disease affected the amount of sugar mills could recover from sugarcane. The average recovery rate reportedly fell from around 9.70% to 8.91%, meaning mills produced considerably less sugar from the available cane.
Production projections were consequently reduced by nearly 11%. Although only around 800,000 tonnes were exported before restrictions were imposed, those shipments further reduced the domestic supply cushion.
Festive demand adds pressure
Sugar demand traditionally rises during festivals such as Onam, Ganesh Chaturthi, Dussehra and Diwali. This seasonal buying arrived when market stocks were already tighter than initially expected.
Speculative trading and stockpiling by some dealers and bulk consumers may have intensified the price increase. The Indian Sugar and Bio-energy Manufacturers Association, however, maintains that India has enough sugar to meet demand and says the unusually sharp rise is partly linked to stocking and market speculation.
Is ethanol responsible?
Ethanol production has attracted attention because mills can divert sugarcane-based material away from sugar manufacturing. However, available data suggests it is not the main reason behind the current price surge.
The share of sugar diverted towards ethanol declined from approximately 12% in 2022-23 to around 9% in 2025-26. Grain, particularly maize, now contributes most of the ethanol produced in India.
Ethanol remains part of the wider supply equation, but lower crop recovery, reduced production estimates, festive demand and market stocking appear to be the more immediate factors behind the price rise.
Government tightens import and stocking rules
To improve domestic availability, the government has permitted the duty-free import of one million tonnes of raw sugar until October 31. It is India’s first significant sugar import measure in nearly a decade. Sugar imports normally attract a 100% duty.
The revised rules require importers to refine raw sugar within two months of filing the Bill of Entry and sell the finished product within the same period. The condition is intended to prevent imported stocks from being held back while prices remain high.
Authorities have also introduced limits for dealers and bulk consumers, including confectionery, beverage and food-processing businesses, while states have been directed to act against hoarding and black marketing.
When could sugar prices ease?
Prices may begin stabilising once imported supplies enter the domestic market and the next crushing season starts in October. Tighter stock controls could also discourage speculative buying.
However, imported shipments will take time to arrive, so consumers may not see an immediate reduction. Until fresh supply reaches the market, sugar prices are likely to remain elevated during the opening weeks of the festive season.