Sugar Prices Rise Sharply to ₹70/kg Ahead of Festive Season: Government Announces 10 Lakh Tonne Import
Sugar prices have risen sharply across parts of India, with retail rates touching as high as ₹70 per kg in some markets over the past 10 days, raising concerns for households, sweet makers and other businesses ahead of the festive season.
The sharp increase comes at a time when demand for sugar is expected to rise with the approaching festive period. The Centre, however, has rejected claims that the price surge is primarily the result of sugarcane being diverted towards ethanol production.
According to the government, a combination of lower-than-expected sugar production, crop damage, stronger seasonal demand and rising international prices has put pressure on the domestic market.
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Sugar prices climb in retail and wholesale markets
Retailers in parts of the Mumbai Metropolitan Region have reported a significant increase in procurement costs. A grocer in Dombivli said sugar was selling at around ₹48-₹50 per kg during the first week of August, but retail prices have subsequently moved towards ₹70 per kg.
Wholesale prices have also climbed sharply. Representatives of the sugar trade said rates in the wholesale market were around ₹62-₹67 per kg, making retail prices above ₹70 possible in some locations.
The increase has also been reflected in official average prices, although the nationwide figures are lower than the highest rates reported in some local markets. The Centre said the all-India average retail price had increased from about ₹48 per kg in July to ₹56 per kg, while average ex-mill prices had risen substantially.
The difference between the national average and local retail prices highlights how sharply prices can vary depending on the market, quality, procurement cost and distribution chain.
Why are sugar prices increasing?
The government has attributed the recent price movement primarily to lower domestic production and developments in the international sugar market.
Sugar production during the 2025-26 marketing season has been lower than earlier estimates. Officials said sugarcane crops in several areas were affected by diseases such as red rot and top borer, while excessive rainfall and waterlogging also damaged crops.
The Centre has maintained that the country still has sufficient stocks to meet domestic consumption until the next crushing season begins.
Domestic consumption is estimated at around 280-285 lakh tonnes annually. Against this requirement, officials said sugar production for the 2025-26 season was around 306 lakh tonnes, below earlier expectations.
An industry assessment had initially projected production at a higher level before estimates were revised downward following weaker productivity in major producing states, including Maharashtra and Uttar Pradesh.
Global sugar prices add pressure
International market conditions are also contributing to the pressure on domestic prices.
The Centre said the global sugar market is expected to face a deficit of around 33 lakh tonnes during 2026-27. International prices reportedly increased from about $474 per tonne at the end of June to around $552 per tonne on August 20.
That represents an increase of more than 16% in less than two months.
Higher global prices can influence domestic market expectations, particularly when traders and producers are assessing future availability and import costs.
Centre rejects ethanol diversion theory
One of the major points of contention has been the role of ethanol production.
Some industry stakeholders have argued that the diversion of sugar towards ethanol has reduced the quantity available for the domestic market. However, Food Secretary Sanjeev Chopra rejected the claim that ethanol diversion was responsible for the recent price surge.
The government said sugar diversion for ethanol has actually declined compared with earlier years. According to officials, around 43 lakh tonnes of sugar were diverted towards ethanol in the 2022-23 marketing year, whereas the figure for the current season is around 28 lakh tonnes.
The Centre also pointed out that a growing share of ethanol production now comes from grains, particularly maize, rather than sugar.
The government has therefore maintained that blaming ethanol alone for the current price increase does not reflect the broader supply and market situation.
Sweet makers feel the impact
The price increase is already affecting businesses that use sugar as a major raw material.
Sweet manufacturers in Mumbai said their production costs have increased as wholesale sugar prices have moved higher. Some businesses are currently absorbing the additional expense rather than immediately passing it on to customers.
However, prolonged price pressure could eventually lead to higher prices for sweets and other sugar-based products.
For sweet shops, the timing is particularly important because demand traditionally increases during festivals. If sugar remains expensive through the upcoming festive season, businesses may face a difficult choice between reducing margins and increasing consumer prices.
Government moves to increase sugar availability
To contain the price rise, the Centre has permitted duty-free imports of 10 lakh tonnes of raw sugar under the tariff-rate quota system until October 31.
The government expects imported raw sugar to increase domestic availability and ease market pressure.
Sugar refineries that have already imported raw sugar under the advance authorisation scheme have also been permitted to transfer stocks for domestic sale. Officials estimate that this measure could make an additional 3-4 lakh tonnes available in the market in the short term.
The government has also imposed stockholding restrictions on bulk consumers and is considering further measures concerning dealers’ inventories.
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Crackdown on hoarding and artificial scarcity
Authorities are also investigating whether stock hoarding or speculative activity has contributed to the sudden rise.
The Food Secretary has warned sugar mills, traders and other industry participants against creating artificial scarcity by holding back physical stocks despite showing sales on paper.
The Centre has begun physical verification of sugar stocks at factories and with traders. States have also been asked to take action against hoarders, black marketers and speculators.
The government expects the findings of the stock verification exercise to provide a clearer picture of the actual availability of sugar in the market.
What happens next?
The immediate focus will be on whether imports and stock-release measures can bring wholesale and retail prices down before festive demand strengthens further.
The government expects the new crushing season to begin earlier than usual, with crushing potentially starting around October 15. Officials believe this could add significant quantities of fresh sugar to the market during October.
For consumers, the key question is whether the current spike is temporary or becomes a sustained increase. If supply improves through imports, stock releases and the arrival of new-season production, prices could moderate. But continued global price pressure or further production concerns could keep the market under strain.
For now, the Centre’s message is that India does not face an immediate shortage of sugar. The challenge is to ensure that adequate stocks actually reach the market and that unusually high prices do not persist into the festive season.
