India is headed for a bittersweet festive season this year. The price of sugar, an essential ingredient for festive confections, has been climbing so sharply that the Union government has been forced to announce a raft of measures to contain it. Over the past few weeks, tighter stockholding limits have been announced for bulk traders, shorter duration mandated for holding inventories and duty-free imports allowed for the first time in nearly a decade. The common Indian is yet to feel their effect on the purse. The average retail price across India this August is almost 35 percent higher than the previous August and 30 percent higher than the month before. Wholesale prices, too, have taken a similar leap.
The salty truth is that India’s sugar output has been falling from a decadal high of 37 million metric tonnes recorded four years ago. This year, the initial estimate of 34 MMT has been watered down to around 30 MMT, near last year’s level.
The government has strenuously maintained that ethanol production has not contributed to the price rise, as diversion to produce the biofuel reduced from 12 percent in 2022-23 to 9 percent in 2025-26. But the rollout of E20 petrol—implemented from April 1 with little consultation—is bound to make a dent in the sugar available for consumption.
Denying any shortage, on Monday, the Indian Sugar Mills Association claimed that traders’ speculation had contributed to the price inflation. Large-scale buyers can hardly be faulted for mopping up when the government estimated a bounteous harvest of this water-sensitive crop even though El Niño-induced disruptions were predicted by early 2026. The Centre has also officially blamed a fungus (red rot) and an insect (top borer) for crop losses.
The government needs to focus on making crop production estimates far more transparent and precise, especially in a country where food inflation has toppled regimes. Bihar Minister Shravan Kumar’s claim that costlier sugar would not affect the large section of Indians who are diabetic should be parked in the growing corner of counter-intuitive claims. It should be noted that prices of onions, too, are on the rise. At this moment, the prospect of cheaper sugar is clearer beyond mid-October, when the new crushing season commences. But by then, India will be immersed in festivals.