Key facts
- India's sugar prices have surged by nearly 40% in two months.
- Production for the 2025-2026 season is now estimated at 30.6 million tonnes, an 11% decrease from earlier forecasts.
- The government plans to import 1 million tonnes of sugar, marking the first such import in nearly a decade.
- Adverse weather conditions, including reduced rainfall due to El Niño and excessive rainfall causing waterlogging, have impacted sugarcane production.
- Concerns exist about the diversion of sugarcane to ethanol production, especially with the push for E20 fuel.
India, the world's largest consumer and second-largest producer of sugar, is facing a significant shortage that threatens its upcoming festive season. Sugar prices have surged by nearly 40% in the past two months, prompting the government to plan the import of 1 million tonnes for the first time in nearly a decade. This comes as demand typically rises from August through the wedding season, with food and beverage companies also stocking up.
Production for the current season (October 2025-September 2026) is now projected to be 30.6 million tonnes, an 11% reduction from the earlier estimate of 34.3 million tonnes. The government attributes the shortfall to lower sugarcane production linked to reduced rainfall during El Niño, hoarding, and tighter global supplies. However, experts suggest that India overestimated its production and allowed significant exports before the extent of the shortfall became apparent. Initially, the government approved exports of 1.5 million tonnes, with an additional 500,000 tonnes in February. Nearly 800,000 tonnes were shipped before exports were halted in May.
With domestic consumption exceeding 28 million tonnes last season and nearly 3 million tonnes expected to be diverted to ethanol production, the import is seen as crucial to provide a buffer. Measures are being taken to mitigate the shortage, including allowing refineries in special economic zones to sell duty-free sugar domestically and asking mills to start crushing cane earlier. However, the upcoming crop also faces risks from erratic weather, with sugarcane being a water-intensive crop. Some commentators also point to the diversion of sugarcane to ethanol production, exacerbated by the push for E20 fuel, as a contributing factor to the shortage.
The government disputes the extent to which ethanol diversion is to blame, stating the share has fallen. Some industry representatives argue that speculation and hoarding, rather than a genuine shortage, are driving prices. However, others contend that the continued price rise after restrictions indicates a real supply squeeze. India's situation mirrors global tightening, with adverse weather affecting production in Thailand, Brazil, and Europe. Global sugar production is forecast to fall this season.