India, the world’s largest consumer of sugar, is trying to avoid a bittersweet festive season.
Price has jumped nearly 40 % over the past two months, prompting the government to import for the first time in a decade to meet a demand surge from August onward, with festivals such as Ganesh Chaturthi, Dussehra and Diwali, and the busy wedding season driving a spike in wholesale costs.
The government had already warned that production would be below last year’s levels, predicting 30.6 million tonnes for the season, 11 % below the earlier estimate of 34.3 million tonnes.
In the last months, a kilogram of sugar that cost around Rs40‑45 (US$0.42‑0.47) in May‑June now sold for more than Rs58‑60 in several markets, though prices lag slightly as import stock starts to arrive.
India is also the world’s second‑largest sugar producer, yet it needed imports because it had already exported large volumes before the shortfall became apparent. The government approved exports of 1.5 million tonnes, added another 0.5 million in February, and halted exports in May after almost 0.8 million tonnes had shipped.
"Allowing exports and then suddenly importing a million tonnes is a huge variation on production estimates and a big surprise," said Vikram Suryavanshi of PhillipCapital India.
With the country consuming over 28 million tonnes last season and 3 million tonnes earmarked for ethanol, the filter for price spikes is tight. Imports should provide a buffer, says Atul Chaturvedi, non‑executive director of Shree Renuka Sugars.
From 1 September, sugar refineries in SEZs will sell duty‑free sugar to the domestic market for three months, an unprecedented move that echoes the 2014 drought strategy.
Other measures include urging mills to start crushing earlier than usual to build stocks as the new harvest arrives, though erratic monsoon rains and droughts in major states like Maharashtra, Uttar Pradesh and Karnataka threaten yields.
“Looking at the climate conditions, the next season is not going to be a bumper crop, although it is too early to assess,” said Chaturvedi.
India began restricting agricultural exports in 2023 when crop damage pushed food prices up; similar restrictions are in place for sugar now, with state‑wide limits on trader stock at 400 tonnes for three months.
Experts argue the early and aggressive export policy left a shortfall unanticipated by the government’s forecasts. Siraj Hussain, former federal agriculture secretary, noted that the season’s production fell below expectations due to disease and surplus rainfall.
Globally, the situation is worsened by El Niño‑induced dry spells in Thailand and heavy rains in Brazil, as well as heatwaves on Europe’s sugar beet crops. U.S. forecasters expect the world’s total production to fall to 184.9 million tonnes this season from 186.1 million last year, while London raw‑sugar futures are the highest since April 2025.
However, higher prices may reduce mills’ economic incentive to divert cane to ethanol. At current sugar prices, “it simply doesn’t make sense for mills to divert cane juice to ethanol, so India’s sugar scenario should be fine going forward,” Chaturvedi said, adding that the country must improve crop forecasting to guard against future shocks.
