Rising sugar prices in India have brought renewed focus on shortcomings in the country’s sugar policy, with inaccurate production estimates and export permissions emerging as key factors behind the current supply pressure.

Sugar prices began coming under pressure from October 2025. Despite concerns over lower sugarcane production and the impact of El Niño, the government reportedly underestimated the risks and permitted sugar exports.

In November 2025, permission was granted to export 1.5 million tonnes of sugar, followed by another 0.5 million tonnes later. By February 2026, signs of lower production had emerged, while sugar mills were reportedly struggling to meet their monthly sales quotas. Despite this, another 0.5 million tonnes of exports were permitted.

Before export restrictions were introduced, around 0.8 million tonnes of sugar had already left the country, further tightening domestic availability.

For 2025-26, India had an estimated surplus stock of 4.7 million tonnes, while sugar production for the year was projected at 27.9 million tonnes. With domestic consumption estimated at around 28 million tonnes for 2026-27, the overall stock initially appeared adequate. However, the export of around two million tonnes added pressure to the supply situation.

The government is now preparing to import one million tonnes of sugar duty-free by October 31. The move would mark India’s first sugar imports since 2016-17.

Meanwhile, the Centre has announced stock limits from September 1 to November 30. Large buyers consuming more than 10 tonnes of sugar per month will be allowed to hold only 15 days’ stock, aimed at preventing hoarding and black marketing.

The government is also considering reducing sugarcane diversion for ethanol and increasing the use of maize and rice for ethanol production.

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