Festive flashpoint: Why sugar prices are rising sharply in India

The hike may be fuelled by a supply shortfall and sugarcane diversion for ethanol. Millers say the price revision was needed to pull the industry out of the redIn what amounts to a bitter taste in the mouth of consumers during the festive season, the retail prices of sugar in major cities have risen by almost Rs 20 per kg over a fortnight to prevail at an average of around Rs 70 per kg.Considering the forthcoming festive period, the Union government has imposed stockholding limits on bulk consumers from September 1 to November 30 in order to prevent hoarding of the sweetener. The sugar stock limit has been reduced to 15 days.India is one of the world’s largest consumers of sugar. In a bid to contain the soaring prices, the Union government, on August 20, permitted the import of 1 million tonnes of raw sugar duty-free. The commerce ministry stated that the imports would be allowed under a tariff rate quota regime, and only till October 30.The rise in sugar prices is said to be fuelled by a shortfall in supply and diversion of sugarcane to the production of ethanol to meet the government’s ambitious yet controversial fuel-blending programme. Millers add that an increase in the prices of sugar is necessary to ensure that the industry comes out of the red. “For the past four years, sugar mills are selling sugar at rates lesser than their cost of production. Sugar industries across the country are in trouble,” said former Maharashtra minister Jayprakash Dandegaonkar, president of the National Federation of Sugar Cooperatives. He added that sugar factories could hold their own only if they could get around Rs 45 per kg for sugar.“Considering that the average sugar consumption per person per month is around 1.75 to 2 kg, a rise in sugar prices will not have a significant impact on household budgets,” maintained Dandegaonkar, adding that sugar prices heading north will eventually provide relief for sugarcane farmers.Dandegaonkar said the financial crunch in the previous sugar season had led to some sugar mills selling more sugar than their release quota. This meant less sugar was hitting the markets now.Vinay Kore Savkar, MLA and former minister who controls the Kolhapur-based Warana group, said that while the Union government had hiked the fair and remunerative price (FRP) by around 28 per cent over the past decade, the minimum support price (MSP) for sugar was largely stagnant at around Rs 3,100 per quintal.The FRP is the minimum price to be paid by sugar factories to sugarcane farmers who sell their sugarcane to the factories for crushing.“The prices of sugar have risen due to seasonal factors as well as a mismatch exists between demand and supply. Any government would want to insulate consumers from inflation and keep the MSP low,” Savkar noted.Savkar, who is the director of the Shree Tatyasaheb Kore Warana Sahakari Sakhar Karkhana Limited, Warananagar, said the Centre must launch a differential price system for industries and domestic consumers. “Those who manufacture high-end products like ice cream, soft drinks, confectionaries and pharmaceutical products must get sugar at a higher rate than domestic consumers,” he suggested, adding that this would come as a relief for the beleaguered sugar industry.Sanjay Khatal, managing director, Maharashtra State Cooperative Sugar Factories Federation, said that while the cost of production for sugar was Rs 4,350 per quintal, it was being sold at a much-lower ex-mill price of Rs 3,825 per quintal. “This has led to the sugar industry in Maharashtra being in distress,” he explained. The industry had requested the Union government to provide soft loans and also restructure their existing loans in order to ensure that banks and financial institutions lend money.“The present rise is sugar prices is not abnormal, but it must be noted that sugar has been retailing at a loss. By July, mills had sold around 80 per cent of their sugar stocks at rates less than the cost of production. The MSP does not even cover the costs of raw material. The MSP must be increased in line with the FRP. The rise in prices will benefit sugar mills, which can sell their residual sugar stocks at higher rates in August and September,” Khatal added.However, farmer leader and former Lok Sabha MP Raju Shetti said the rise in sugar prices was “suspicious” and would help traders instead of farmers. He questioned why the prices were going northwards when the country had enough stocks to last till Diwali. The production in the next season was also expected to be enough to meet the demand.In 2024-25, around 1.37 million hectares were under sugar cultivation in Maharashtra, which is among the highest producers of cane in the country. In 2023, the area was 1.4 million hectares and 1.48 million hectares in 2022-23.The previous sugarcane crushing season in 2025-26 saw 1,045.6 lakh metric tonnes (LMT) of sugarcane—grown on 1.6 million hectares—being crushed by 208 cooperative and private sugar factories, and it is expected to be at a marginally higher 1,100-1,125 LMT in the coming season. Sugar production was around 99 LMT, up from about 81.04 LMT in 2024-25. This is around a third of the sugar production in India in 2025-26.Subscribe to India Today Magazine- EndsPublished By: Akshita JollyPublished On: Aug 21, 2026 18:25 IST