Not ethanol, but low output, festive demand behind sugar price hike: Centre

The price surge has prompted the government to step up measures to curb hoarding and allow sugar imports for the first time in nearly a decade.

The government on Friday said the recent surge in sugar prices cannot be attributed to the diversion of sugar for ethanol, pointing instead to lower-than-expected domestic production, higher festive-season demand, and weather-related crop damage.

Members of Sarv Ekta Manch protesting against price hike in sugar and onion at Dak Bungalow crossing in Patna, Bihar. (Santosh Kumar/HT Photo)

Average retail sugar prices rose from ₹48.18 per kg on July 20 to ₹58.20 per kg on August 21, according to data from the consumer affairs ministry’s price portal. The price surge has prompted the government to step up measures to curb hoarding and allow sugar imports for the first time in nearly a decade to augment domestic availability ahead of the festive season.

Government blames fall in domestic production

According to an official release, the share of sugar diverted for ethanol has declined from around 12% of production in 2022-23 to about 9% in 2025-26 as output dropped. Nearly three-fourths of ethanol produced in India now comes from grains, particularly maize, the government stated.

Deep Dive

What are the main reasons for the recent rise in sugar prices in India?

How does the diversion of sugar for ethanol production affect sugar prices?

Why has the Indian government allowed duty-free import of raw sugar?

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Domestic sugar production in the current season is expected to reach around 30.6million tonnes, well below the initial estimate of 34.35 million tonnes. Output fell as crops were hit by red rot and top borer diseases in sugarcane, alongside waterlogging from excess rainfall.