New Delhi: The government Friday rejected claims that diversion of sugar for ethanol production was driving a sharp rise in the price of the sweetener and instead blamed the industry for jacking up prices despite the country having sufficient stock to meet domestic demand.
The Centre has asked States to take action against hoarding and black marketing of the sweetener and also start preparing for early start of the crushing season by mills, by around October 15. It is also considering reducing the stock that dealers can hold.
Briefing the media on sugar availability and prices, Food Secretary Sanjeev Chopra said the government has taken precautionary measures by allowing imports of 10 lakh tonnes of sugar by October 31 and imposing stock-holding limits on dealers as well as bulk consumers such as soft-drink and ice-cream makers.
He asserted that there are ample sugar stocks in the country despite a fall in production to 306 lakh tonnes for the 2025-26 marketing year (October-September), down from earlier estimates of 343 lakh tonnes, mainly because of pest disease in sugarcane crops and waterlogging caused by excess rains. Annual domestic demand is around 280-285 lakh tonnes.
Following the government’s recent measures, the secretary said retail prices are expected to fall in the coming days. The all-India average retail price has shot up to Rs 56 per kg from Rs 48 per kg on July 20.
Chopra pointed out that ex-mill sugar prices have shot up to Rs 62 per kg from Rs 47-48 per kg in just about 7-10 days, and said this kind of hike is “unjustified”.
On Friday, the secretary called representatives of the industry bodies ISMA and the National Federation of Cooperative Sugar Factories (NFSCF) and told them that this sudden, sharp hike in ex-mill prices is “not acceptable”.
“We have always been assisting the sugar sector, and we expect that they will not take advantage of these situations to the detriment of the consumers of the country,” Chopra said.
On the ethanol issue, the secretary said it is incorrect to attribute the recent increase in sugar prices to diversion of sugar for ethanol production.
“Some of the stakeholders are trying to create the impression that the sugar prices have gone up only because of ethanol diversion, which is completely baseless,” Chopra said, adding that the diversification to ethanol has improved the financial health of the sugar sector and also helped in timely payment to farmers.
In the 2022-23 marketing year, he said almost 43 lakh tonnes of sugar was diverted, which in percentage terms stood at 12 per cent of the total sugar stock.
Only 28 lakh tonnes of sugar have been diverted in the current 2025-26 marketing season, the secretary said. Only one-fourth of ethanol is now made from sugar and the rest from grains, mainly maize.
Regarding prices, Chopra said, “There has been this sharp increase in the prices of sugar in the recent past, and they have gone up from Rs 48 just about 15 days back to a level of Rs 56 now. It is important to clarify that this is not based on any fundamentals”.
Stating that there are “ample and adequate” stocks in the country, he said, “There is no reason for any of these stakeholders to take advantage of this kind of a position. Profiteer, hoard, speculate, and create the impression that the country has no sugar in stock.”
India will have a closing stock of 33-35 lakh tonnes at the end of September 2026, he said, adding that the mills are expected to start early this year by October 15th.
“So we are estimating, since the crushing will start early this year by 15th of October, there will be about 10-12 lakh tonnes of additional sugar available in the month of October, which will ensure that the availability will be more than adequate to cater to the domestic requirements,” Chopra said.
Despite a comfortable stock situation, he said, “as a matter of abundant precaution, the government has also given approval to have duty-free import of about 10 lakh tons of raw sugar”.
Apart from that, Chopra said sugar refineries that have imported raw sugar under the advance authorisation scheme have been allowed to transfer their stocks for domestic sales. This will help in boosting sugar availability by 3-4 lakh tonnes immediately.
“These are all additional steps taken as a matter of abundant precaution. There is no justification for some of these players in the sugar sector to have hiked the prices. We are in fact aware,” he said.
Chopra said he held meetings with the two sugar associations and “told them that what has happened over the past few days is not acceptable”.
“The ex-mill prices, for no reason, have shot up from a level of Rs 47-48 per kg to a level of Rs 62 per kg in just about 7-10 days, and there is no reason why they have actually jacked up the prices. So we have conveyed our sentiments to the industry”.
To create “artificial scarcity”, the secretary said some sugar mills are selling the stocks only on paper and not selling it physically. Therefore, he has instructed that the quantities sold must reach the markets for retail sale.
Chopra informed that he held a meeting with all the major sugar-producing states.
“They have also been told to be in readiness to start the sugar crushing early around 15th of October. We have also told them to come down heavily on the black marketers, hoarders and speculators,” he said.
The secretary said the government is also considering tightening the stock-holding limits for dealers, which are currently set at 400 tonnes.
Regarding the stock limit on bulk users, the secretary said it could be a little inconvenient for them. From September 1, bulk consumers will also be barred from holding stocks exceeding 15 days of consumption.
“But keeping in view the situation where some people are bent on holding the stocks unnecessarily without any reason when ample stocks are available, I think these are some steps that the government has taken of late, which will ensure that the availability in the market improves,” he said.
Chopra assured that there would be no issues with stock availability during the festive season and beyond. He asserted that the government would take all possible steps to protect the interest of farmers and consumers.
