Before the start of the holiday season, sugar prices caused concern among ordinary citizens. In several major cities across the country, the cost of sugar has increased by up to 40% compared to two weeks ago. The main reason cited for the sudden price hike is the deficit in domestic supply, leading the government to tighten control over sugar stocks and sales.
At the beginning of the 2025-2026 sugar season, the situation was different. The government and the sugar industry anticipated a significant increase in production, with the initial estimate being around 34.9 million tons. Based on the expectation of sufficient reserves, the government also permitted sugar exports.
However, as the season progressed, production forecasts began to steadily decline. Production suffered in key sugar regions such as Maharashtra and Karnataka due to low harvests, crop damage from rains, and diseases like red rot and top borer. The current government estimate stands at approximately 30.6 million tons.
Concurrently, demand for sugar rose during the holidays. In August, the government set a sales quota of 2.25 million tons, matching last year's level instead of increasing it, which intensified pressure on market supply.
In response to the deteriorating situation, on August 19, the government tightened stock limits for large industrial buyers. Following this, for the first time in about a decade, the path was opened for sugar imports. On August 20, the import of 10 million tons was permitted. Despite this, prices reached 7,100 rupees per quintal in some processing plants.
The government notes that the price increase is not solely due to the use of sugar for ethanol production. Key factors contributing to the rise in prices include reduced production, holiday demand, weather-related crop damage, and market fluctuations. Currently, the government is closely monitoring domestic availability and prices to mitigate the burden of rising costs for consumers during the holidays.