The Centre on Friday rejected claims that diversion of sugar for ethanol production was driving a sharp rise in sugar prices, instead blaming the industry for raising prices despite adequate stocks to meet domestic demand.
The government has asked sugar-producing States to crack down on hoarding, black marketing and speculation, while preparing mills for an early start to the crushing season around October 15. It is also considering tightening the stock-holding limit for dealers.
Briefing the media on sugar availability and prices, Food Secretary Sanjeev Chopra said the government had taken precautionary measures, including approving duty-free imports of 10 lakh tonnes of raw sugar by October 31 and imposing stock limits on dealers and bulk consumers such as soft-drink and ice-cream manufacturers.
Chopra said India had adequate sugar stocks despite production falling to 306 lakh tonnes in the 2025-26 marketing year, from an earlier estimate of 343 lakh tonnes. The decline was attributed mainly to pest and disease attacks on sugarcane crops and waterlogging caused by excessive rainfall. Annual domestic sugar consumption is estimated at 280-285 lakh tonnes.
The all-India average retail price of sugar has risen to Rs 56 per kg from Rs 48 per kg on July 20. Ex-mill prices have increased even more sharply, climbing from Rs 47-48 per kg to Rs 62 per kg in the past seven to 10 days.
Calling the increase "unjustified", Chopra said he had summoned representatives of industry bodies, the Indian Sugar and Bio-energy Manufacturers Association (ISMA) and the National Federation of Cooperative Sugar Factories (NFCSF), and conveyed that the sudden increase was "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," he said.
Rejecting the argument that ethanol production was responsible for the recent price increase, Chopra said only 28 lakh tonnes of sugar had been diverted for ethanol in the current marketing season, compared with nearly 43 lakh tonnes in 2022-23.
The diversion in 2022-23 accounted for about 12 per cent of total sugar stocks, he said. At present, only about one-fourth of ethanol is produced from sugar, with the rest coming mainly from grains such as maize.
"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.
He added that ethanol diversification had strengthened the financial health of the sugar industry and helped mills make timely payments to farmers.
Chopra said India was expected to have a closing sugar stock of 33-35 lakh tonnes by the end of September 2026. With mills expected to begin crushing early, around October 15, another 10-12 lakh tonnes of sugar could become available during October.
"This will ensure that the availability will be more than adequate to cater to the domestic requirements," he said.
As an additional precaution, the government has approved duty-free imports of around 10 lakh tonnes of raw sugar. Refineries that imported raw sugar under the advance authorisation scheme have also been permitted to transfer their stocks for domestic sale, potentially adding another 3-4 lakh tonnes to immediate market availability.
"There is no justification for some of these players in the sugar sector to have hiked the prices," Chopra said.
The government has also raised concerns that some mills are showing stocks as sold on paper without physically releasing the sugar into the market, creating an artificial shortage. Chopra said mills had been instructed to ensure that quantities sold actually reach the market.
The Centre has asked major sugar-producing States to prepare for the early start of crushing and take strict action against hoarders, black marketers and speculators.
The government is considering reducing the current stock-holding limit of 400 tonnes for dealers. From September 1, bulk consumers will also be prohibited from holding sugar stocks exceeding 15 days of their consumption.
Chopra acknowledged that the measure could cause some inconvenience to bulk users but said it was necessary to prevent unnecessary stockpiling when supplies remained adequate.
The Food Secretary assured consumers that there would be no shortage of sugar during the upcoming festive season or beyond, saying the government would take all necessary measures to protect the interests of both farmers and consumers.
(With inputs from PTI)
