A few months ago, India was gearing up for a bumper sugar season — production estimates were healthy, exports had been given the green light, and nobody was particularly worried about what would land on grocery shelves. Then the numbers started falling apart.
Rain-battered fields in Maharashtra and Karnataka, a fungal disease ripping through Uttar Pradesh’s cane belt, festive-season demand running hot, whispers of hoarding, and an ethanol programme that’s become everyone’s favourite scapegoat — all of it collided at once.
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The result: sugar prices have jumped by roughly a third in a year, and the government is now scrambling to put the genie back in the bottle.
Here’s how it happened, and why the ethanol story isn’t quite as simple as it sounds.
What do the numbers say?
Retail sugar cost about ₹62.47 a kilo on August 23 — up from ₹46.30 a year earlier. Wholesale prices moved almost in lockstep, climbing from roughly ₹4,313 to ₹5,801 per 100 kg over the same period.
The government now pegs this season’s gross sugar output at around 30.6 million tonnes. That’s a steep comedown from the 34.3 million tonnes that sugarcane-growing states had originally projected — and that gap between promise and reality is really where this whole crisis begins.
What actually went wrong with the crop?
It wasn’t one bad harvest — it was several different problems hitting different states at once.
In Maharashtra and Karnataka, the country’s two biggest cane producers, the southwest monsoon overstayed its welcome, dumping excess rain through September and October. Waterlogged fields plus weak sunshine meant the cane didn’t build up enough sucrose, so yields dropped, and mills struggled to recover as much sugar per tonne of cane crushed.
Uttar Pradesh had a different headache: red rot, a fungal disease, tore through plantations — especially the widely planted Co-0238 cane variety — alongside damage from the top shoot borer pest. Same outcome, different cause: less cane, less sugar per tonne.
Put those three states together, and you get a production estimate that kept sliding downward all season, right as demand was picking up.
So is ethanol the villain?
This is the part everyone’s arguing about — and the data suggests it’s more of a supporting character than the main culprit.
About 30 lakh tonnes of sugar were diverted into ethanol production this season. That sounds like a lot, and critics have seized on it as the reason shelves are tighter and prices are higher. But set it against the bigger picture: gross sugar production came in 34.5 lakh tonnes below what was originally expected — a shortfall bigger than the entire ethanol diversion.
In other words, the crop simply underperformed by more than ethanol took out of the system. The government also points out that ethanol’s share of sugar diversion has actually fallen, from about 12% in 2022–23 to roughly 9% this season, as India increasingly turns to grain — mainly maize — for ethanol instead. Nearly three-quarters of the country’s ethanol now comes from grain, not cane.
None of this clears ethanol entirely, but it does mean pinning the entire price spike on the blending programme oversimplifies what happened.
What are experts saying?
Not everyone agrees the crisis is really about weather or ethanol at all. Maharashtra-based farm activist Vijay Jawandhiya, speaking to The Federalargued the deeper issue is decades of government control over the sugar sector — a market that, he says, has never truly been free despite talk of liberalisation since the 1990s.
His critique: when India had a surplus, the government pushed exports through subsidies — but never built a buffer stock of sugar the way it does for wheat and rice. So when production started sliding two or three years ago, and this year’s weather made it worse, there was no cushion to fall back on.
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He also has a theory on the hoarding angle: traders don’t hoard when supply looks normal — they hoard when they sense a shortage coming. “The government’s own announcement that it would cap stock limits (after spotting hoarding signs) may have spooked traders into holding even more stock,” he said, adding that the state may have been slow to act against hoarders initially, but tougher recent enforcement has already helped prices ease by ₹7–8 per kg.
What is the government is doing about it?
Faced with rising prices and thinning stocks, the Centre has pulled several levers at once:
In Export: Sugar exports are barred until September 30, 2026.
Import window: Up to 10 lakh tonnes of raw sugar can now come in duty-free until October 31 — a sharp break from the usual 100% import tariff.
Stock limits: Since July 28, dealers can’t hold more than 400 tonnes of sugar, or hold any stock for longer than 30 days.
Transparency push: From August 13, mills have had to report details of any bulk buyer that purchased 500 tonnes or more during 2025–26.
What happens next?
With imports flowing in and a fresh crushing season about to begin, the big question is whether these measures actually bring prices down — without forcing the government to backtrack on its broader ethanol-blending goals. For now, it’s a balancing act: keep sugar affordable, keep ethanol targets alive, and hope next season’s crop doesn’t throw up another surprise.
(With inputs from Shravan Kumar K)