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

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.

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.

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.

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.

Pallavi Singhal covers agriculture, food policy and the rural economy from New Delhi. Over the past four years, she has reported extensively on farm policy, food inflation, procurement, agri-markets and rural livelihoods. Before joining Hindustan Times, she worked at Moneycontrol and Informist. A journalism post-graduate, she started as a trainee reporter in 2019 with The Indian Express, Chandigarh. Away from the newsroom, she enjoys travelling and crime fiction—preferably mysteries easier to crack than government policy. Read More