Buying a packet of sugar in any of the major metros today will set you back by roughly 40% more than a fortnight ago. The reason: A severe supply crunch. This has prompted the government to fortify sugar stores at the onset of the festive season which traditionally begins with Onam and Rakshabandhan in August.
Sugar production was expected to rise sharply, diversion to produce ethanol was expected to be lower, and mills were pressing for permission to export more sugar to prevent stocks and dues to cane farmers from piling up. This was starkly different from the year before. But by May, projections changed and the policy took a U-turn. “The government has understandably relied on industry bodies such as ISMA for production assessments, given their close visibility of the sector. However, their repeated revisions in sugar and cane estimates over recent years suggest both official and industry forecasting systems need to be more robust. To be sure, the government has denied that it goes by industry estimates. Industry estimates are not the basis of the Government’s production forecast or policy decisions. The government has maintained that ethanol did not lead to this price spike.
At the beginning of this sugar season (October 1, 2025; it ends on September 30, 2026), the government and the industry prepared for a surplus. In the 2024-25 season, the government had allowed 1 million tonnes of exports only in January 2025, whereas for the current season it approved an initial 1.5 million tonnes in November 2025, soon after the season began . It allowed export of another 500,000 tonnes in February. In a statement released on August 21, it 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.
Inaccurate assessments have influenced major policy decisions with consequences for consumers, domestic trade and India’s credibility in global markets,” said Deepak Pareek, founder HnyB, an agri advisory. The department of food and public distribution said: “Sugar production estimates used by the government are based on inputs received from the Cane Commissioners/Sugar Commissioners/Sugar Directorate of the sugarcane-producing States.
Based on the estimate, the government allowed the industry to export sugar earlier in the season.
Outlook for the next season
In a response to HT’s queries, the department of food and public distribution in a statement said, “The government will continue to closely monitor sugar availability, prices and market practices and take further measures, as necessary, to protect consumers while safeguarding the interests of sugarcane farmers,” the statement added.
