Sugar prices rose from Rs 48.18 per kg on July 20 to Rs 55.70 per kg on August 20.
The Centre imposed a 400-tonne stock limit on sugar dealers and ordered checks to prevent hoarding.
The government approved duty-free imports of 10 LMT raw sugar and advised mills to begin crushing from October 15.
The government has announced a series of measures to curb the recent rise in sugar prices and ensure adequate supplies during the festive season, including stock limits on dealers, checks on sugar stocks, duty-free imports and steps to increase domestic production.
Sugar prices rose from Rs 48.18 per kg on July 20 to Rs 55.70 per kg on August 20, prompting the government to step up monitoring of prices and availability. It attributed the increase to lower-than-expected domestic production, higher demand ahead of the festive season, weather-related damage to sugarcane crops, tightening global supplies, and speculation and hoarding by some sections of the industry.
The government also rejected claims that the recent rise in sugar prices was caused by the diversion of sugar towards ethanol production, noting that the share of sugar diverted for ethanol has declined in recent years.
Sugar production in the current season is expected to be around 306 lakh metric tonnes (LMT), compared with the initial estimate of around 343 LMT by sugarcane-growing states. Production has been affected by Red Rot and Top Borer diseases in sugarcane, as well as waterlogging caused by excess rainfall.
Despite the lower production estimate, the government said the country has adequate sugar stocks to meet domestic demand until the new crushing season begins in October.
The increase in prices has also come amid tighter global sugar supplies. The global sugar deficit for 2026-27 is estimated at around 33 LMT, while concerns over weather conditions have affected the global outlook. International sugar prices increased from $474 per tonne on June 30 to $552 per tonne on August 20, a rise of more than 16 per cent in less than two months.
The government said it was incorrect to attribute the price increase to the ethanol programme. The share of sugar diverted for ethanol fell from around 12 per cent in 2022-23 to around 9 per cent in 2025-26. Nearly three-fourths of the ethanol produced in India now comes from grains, particularly maize.
The government said the ethanol programme has helped sugar mills manage surplus production and improve their financial position. India normally produces around 320-340 LMT of sugar annually, compared with domestic consumption of around 280-290 LMT. During surplus years, excess stocks can tie up funds of sugar mills and contribute to delays in payments to sugarcane farmers.
The diversion of excess sugar towards ethanol has helped address this problem, the government said. As of August 20, 97 per cent of sugarcane dues for the 2025-26 sugar season had been paid.
The improved financial position of sugar mills has also reduced their dependence on government support. Around Rs 14,600 crore in subsidies was provided to the sugar industry between 2014 and 2021, while no such subsidy has been announced since 2021-22. Over the longer term, consumer sugar prices have remained broadly stable, with prices rising by around 3 per cent annually between August 2024 and July 2026.
To address speculation and hoarding, the government has imposed a stock limit of 400 tonnes on sugar dealers across the country from August 1 until November 30, 2026. From September 1, bulk consumers will not be permitted to hold stocks exceeding 15 days of consumption.
Joint teams of Central and State Government officials are also conducting physical verification of stocks at sugar mills to check hoarding and artificial scarcity.
The government has additionally decided to permit duty-free imports of 10 LMT of raw sugar to increase domestic availability. States and sugar mills have been advised to begin crushing from October 15. This is expected to raise October sugar production from the usual 3-4 LMT to more than 10 LMT.
