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Centre says rise in sugar prices cannot be attributed to ethanol
Sugar prices have risen sharply in recent weeks, increasing from ₹48.18 per kg on July 20, 2026, to ₹55.70 per kg on August 20.
The government on Friday rejected claims that ethanol production was driving the recent surge in sugar prices.
“It is incorrect to attribute the recent increase in sugar prices to diversion of sugar for ethanol production,” the Ministry of Consumer Affairs, Food & Public Distribution said in a statement.
According to the government, the share of sugar diverted for ethanol production fell from around 12% in 2022-23 to around 9% in 2025-26. It also said nearly three-fourths of the ethanol produced in the country now comes from grains, particularly maize.
Sugar prices have risen sharply in recent weeks, increasing from ₹48.18 per kg on July 20, 2026, to ₹55.70 per kg on August 20, 2026.
“The present increase in sugar prices is due to a combination of factors, including lower-than-expected domestic production, increased demand ahead of the festive season, weather-related damage to the sugarcane crop, tightening global sugar supplies and speculation and hoarding by some sections of the industry,” the statement added.
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Global sugar shortage adds to price pressure
The government said the price rise is also part of a wider global trend, with tightening supplies affecting sugar markets internationally. The global sugar deficit for 2026-27 is estimated at around 33 LMT, while weather-related concerns have further weakened the outlook. International sugar prices rose from $474 per tonne on June 30, 2026, to $552 per tonne on August 20, 2026, marking an increase of more than 16% in less than two months.
Defending the ethanol programme, the Centre said it has helped address the problem of surplus sugar production while improving the financial health of sugar mills. India typically produces around 320-340 LMT of sugar annually, against domestic consumption of approximately 280-290 LMT. During surplus years, excess stocks can lock up funds with mills and delay payments to sugarcane farmers.
The government said diverting surplus sugar towards ethanol has helped ease this structural issue. As on 20 August 2026, 97% of sugarcane dues for the 2025-26 sugar season have already been paid to farmers.
It also said stronger finances have reduced sugar mills' dependence on government support. While around ₹14,600 crore in subsidies was provided to the sugar industry between 2014 and 2021, no such subsidy has been announced since 2021-22.
