Sugar prices in India have surged sharply in recent weeks, putting the spotlight on the country sugar and ethanol policies. Retail sugar prices climbed from around ₹48.18 per kg on July 20 to ₹55.70 per kg on August 20, an increase of nearly 16% in just one month.
The sharp rise has triggered debate over whether the diversion of sugarcane towards ethanol production is reducing sugar availability in the domestic market. However, the Centre has rejected this explanation, saying it is incorrect to link the recent price rise directly to ethanol production.
According to the government, sugar production is now estimated at around 306 lakh tonnes, significantly below the initial estimate of 343 lakh tonnes. Weather-related crop damage, lower output, rising demand ahead of the festive season, tightening global supplies and alleged hoarding have contributed to the price pressure.
The government also pointed out that the share of sugar diverted for ethanol has actually declined from around 12% in 2022-23 to about 9% in 2025-26. Nearly three-fourths of India ethanol production now comes from grains, particularly maize. To control prices, authorities have imposed stock limits and approved duty-free imports of 10 lakh tonnes of raw sugar. The controversy highlights a larger challenge for India: balancing its push for cleaner ethanol fuel with the need to maintain affordable sugar supplies, particularly as festive-season demand rises.
