The significant rise in sugar prices has caused concern among consumers, farmers, businessmen, and policymakers. Various versions are being put forward regarding the reasons for this increase. Farm leaders accuse certain business participants and sectors of the sugar industry of hoarding stocks, artificially creating shortages, and speculating on profits.
In turn, the government explains the price increase by citing low domestic production compared to expectations, increased demand during the festive season, crop damage due to weather, reduced global supply, and market speculation.
According to government data, the average retail price of sugar rose from 48.18 rupees per kilogram on July 20, 2026, to 55.70 rupees per kilogram on August 20, 2026, representing a substantial jump in just one month. Market information suggests that in some areas, retail prices have risen even higher, reaching 70-80 rupees per kilogram instead of the previous around 50 rupees.
Farmer leader Raju Shetty questioned why sugar prices rose so sharply if farmers have not received a proportional increase in income. According to Shetty, until June, the price of sugar remained stable at around 3500-3600 rupees per quintal. He claims that large sugar producers also control trading companies, selling sugar to these companies at a relatively low price, and then storing it. Later tender prices rose to approximately 6500 rupees, which brought significant profit to traders.
Shetty stated that through this process, traders can earn about 2200 rupees per ton, and he estimated the total loss could amount to 22,000-23,000 crore rupees. He noted that sugar prices remained stable for most of the season, and the alleged manipulation began after the government introduced an export ban. He emphasized the timing of this moment, as increased demand for sugar is expected during festivals such as Dasara, Diwali, and Ganesh Chaturthi. In Shetty's opinion, traders began raising prices and creating an atmosphere of scarcity based on the forecast of seasonal demand growth.
He also asserted that traders could profit from approximately 88 lakh metric tons of sugar over four months. Shetty added that the country already has sufficient sugar reserves to meet needs until November, casting doubt on claims of immediate shortage.
The Sugar Commissioner of Maharashtra, Sanjay Kolte, admitted that sugar production this year was lower compared to last year due to a number of natural factors. Kolte explained: 'This year's sugar production is lower compared to last year due to various natural reasons. Rain and other factors affected production, leading to a decrease in sugar output compared to last year.' He also pointed to the increased diversion of sugarcane towards ethanol production. He reported that last year, 15 lakh metric tons of sugarcane were processed for ethanol production, while this year this volume increased to 18 lakh metric tons.
Nevertheless, Kolte strongly stated that there should be no sugar hoarding. He reminded: 'There should be no sugar hoarding. The government has issued directives stating that sugar stored in warehouses must be released to the market within seven days.'
The central government rejected the claim that the recent rise in sugar prices is mainly related to sending sugar for ethanol production. According to the government, the share of sugar diverted to ethanol has actually decreased from about 12 percent in 2022-23 to almost 9 percent in 2025-26. Furthermore, about three-quarters of India's ethanol production now comes from grains, particularly corn.
The government believes that the current price increase is the result of several factors. These include lower domestic sugar production than expected, increased demand before the festive season, crop damage to sugarcane due to weather, reduced global sugar supply, and speculation and stock accumulation by some industry sectors.
Initially, the government expected sugar production to be around 343 lakh tons based on forecasts received from sugarcane producing states. This forecast has now been lowered to approximately 306 lakh tons. Typically, India produces about 320-340 lakh tons of sugar annually, with domestic consumption estimated at 280-290 lakh tons. Usually, in years with high production, surplus sugar can slow down the working capital of sugar mills and cause delays in payments to farmers.
The government argues that the ethanol program helped solve this problem by providing an alternative use for surplus sugar and improving the financial position of sugar mills. According to the government, by August 20, 2026, 97 percent of payments owed to sugar mills for the 2025-26 season had been made to farmers. The government also reported that from 2014 to 2021, the sugar industry received a government subsidy of about 14,600 crore rupees, but no subsidies have been announced since 2021-22.
Global sugar shortage is also exerting pressure. The government notes that the rise in sugar prices is due not only...
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