India’s sugar production outlook has weakened sharply after crop damage caused by disease and excessive rainfall, with the government identifying these factors behind the recent rise in domestic sugar prices.
According to the government, the production estimate for the current sugar season has been revised to around 30.6 million tonnes, from an earlier estimate of 34.3 million tonnes. The revision represents a decline of more than 10 per cent from the earlier projection.
The government attributed the reduction to Red Rot and Top Borer disease affecting sugarcane crops, along with waterlogging caused by excessive rainfall in some sugar-producing regions.
The production estimate is significant for the domestic market because India generally produces around 32-34 million tonnes of sugar annually, while domestic consumption is estimated at about 28-29 million tonnes.
Why Ethanol Is Not Main Cause
The price surge has also revived criticism of India’s ethanol policy, with concerns that sugar diverted into fuel production may have reduced supplies for consumers.
The government has rejected that explanation. It says the proportion of sugar diverted towards ethanol fell to around 9% in 2025-26 from about 12% in 2022-23.
The government also pointed to the changing composition of ethanol production, with nearly three-fourths now coming from grains, particularly maize. It said diversion towards ethanol had contributed to better financial conditions for sugar mills and that 97% of sugarcane dues for the 2025-26 season had been paid to farmers.
Crop Diseases Hit Cane
The government said crop-related factors have affected the availability of sugarcane for processing by mills.
Red Rot is a fungal disease that can damage sugarcane stalks and reduce crop productivity. Top Borer is an insect pest that attacks the growing parts of the cane plant and can affect yields.
Excess rainfall has added another challenge, with waterlogging affecting sugarcane fields in some areas. Together, these factors have contributed to a lower production outlook for the current season.
The revised estimate means the expected surplus over domestic consumption is narrower than initially projected. The government, however, has said that sufficient sugar stocks are available to meet domestic requirements until the next crushing season begins in October.
Prices Rise Across Markets
Government data cited in the latest statement show that the average retail price of sugar increased from ₹48.18 per kg on July 20 to ₹55.70 per kg on August 20.
The government has also pointed to increased demand during the festival period as a factor affecting the market. Sugar consumption typically receives additional support during the months leading up to major festivals, when demand from households, sweet manufacturers and food businesses increases.
Government Flags Market Activity
Alongside lower production, the government has raised concerns about stockholding and speculative activity in the sugar trade.
The Centre has introduced stockholding restrictions for sugar dealers, with limits applicable from August 1 through November 30. The measures are intended to ensure that available supplies continue moving through the market and are not excessively accumulated.
From September 1, bulk consumers using more than 10 tonnes of sugar a month will also be subject to inventory restrictions. They will be permitted to hold up to 15 days of consumption between September 1 and November 30.
The government has said these measures are aimed at preventing excessive stock accumulation during a period when the market is facing tighter supply conditions.
New Season Holds Key
The next sugar crushing season is scheduled to begin in October, when fresh sugarcane supplies are expected to reach mills.
Until then, the government says domestic availability remains adequate. The revised production estimate, however, indicates that the supply position will be tighter than initially expected.
The government’s explanation for the current price movement therefore centres on lower sugar production caused by crop diseases and excessive rainfall, alongside seasonal demand and market activity.
The performance of the new sugarcane crop and the start of the October crushing season will determine how the domestic supply position develops in the coming months.
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