Daijiworld Media Network - New Delhi

New Delhi, Aug 21: The government on Friday rejected claims that the recent rise in sugar prices was caused by diversion of sugar for ethanol production, pointing out that the share of sugar diverted for ethanol has declined from around 12 per cent in 2022-23 to about 9 per cent in 2025-26.

“Moreover, nearly three-fourths of the ethanol produced in the country now comes from grains, particularly maize,” the Ministry of Consumer Affairs, Food and Public Distribution said in a statement.

The government said it is closely monitoring the situation and has taken several measures to ensure adequate availability of sugar and stable prices for consumers.

Sugar prices have risen sharply in recent weeks, increasing from Rs 48.18 per kg on July 20 to Rs 55.70 per kg on August 20.

“The present increase in sugar prices is due to a combination of factors, including lower-than-expected domestic production, increased demand ahead of the festive season, weather-related damage to the sugarcane crop, tightening global sugar supplies and speculation and hoarding by some sections of the industry,” the ministry said.

Sugar production in the current season is expected to be around 306 lakh metric tonnes (LMT), compared with the initial estimate of approximately 343 LMT made by sugarcane-growing states.

Production has also been affected by Red Rot and Top Borer diseases in sugarcane, along with waterlogging caused by excessive rainfall.

Despite the lower-than-expected production, the government said adequate sugar stocks are available to meet domestic demand until the new crushing season begins in October.

The ministry said tightening sugar supplies are part of a global phenomenon and are not limited to India.

The global sugar deficit for 2026-27 is estimated at around 33 LMT, while concerns over weather conditions have further weakened the global supply outlook.

International sugar prices have consequently risen from $474 per tonne on June 30, 2026, to $552 per tonne on August 20, an increase of more than 16 per cent in less than two months, according to the statement.

India normally produces around 320-340 LMT of sugar annually, against domestic consumption of approximately 280-290 LMT. During surplus years, excess stocks can block the working capital of sugar mills and delay payments to sugarcane farmers.

The government said diversion of surplus sugar towards ethanol has helped address this structural issue and improved the financial health of sugar mills.

“The results are visible. As on 20 August 2026, 97 per cent of sugarcane dues for the 2025-26 sugar season have already been paid to farmers,” it said.

The improved financial position of sugar mills has also reduced their dependence on government support. While around Rs 14,600 crore in subsidies was provided to the sugar industry between 2014 and 2021, no such subsidy has been announced since 2021-22.

The ministry further said consumer sugar prices had remained broadly stable over the longer term, rising by only around 3 per cent annually between August 2024 and July 2026.

To check excessive stockholding and speculation, a 400-tonne stock limit has been imposed on sugar dealers across the country from August 1 to November 30, 2026.

From September 1, bulk consumers will also not be permitted to hold sugar stocks exceeding 15 days of consumption.