The government has moved to curb the recent rise in sugar prices, ruling out diversion of sugar towards ethanol as the reason for the increase and instead pointing to hoarding, artificial scarcity and higher festive-season demand.
The Department of Food and Public Distribution in a press release said adequate sugar stocks are available to meet domestic requirements and stressed that the recent price increase is not due to diversion of sugar for ethanol production.
According to the government, the share of sugar diverted for ethanol fell from 12% in 2022-23 to 9% in 2025-26. It also pointed out that nearly three-fourths of ethanol produced in India now comes from grains, mainly maize, reducing the dependence of ethanol production on sugar.
The government said the increase in sugar prices is the result of several factors rather than a shortage caused by ethanol diversion. Lower sugar production, higher demand during the festive season and damage caused by adverse weather conditions have contributed to the price rise. Tight global sugar supplies have also added to upward pressure on domestic prices.
At the same time, the government has flagged speculation and hoarding by certain sections of the industry as factors contributing to the increase in prices. It has warned that action will be taken against entities found to be hoarding sugar or resorting to unwarranted price increases.
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As part of its efforts to prevent artificial scarcity, joint teams of central and state government officials are conducting physical verification of sugar stocks at mills. The exercise is aimed at checking whether reported inventories match actual stocks and identifying any attempts to withhold supplies from the market.
The government has also imposed a stock limit of 400 tonnes on sugar dealers, which will remain in place until November 30. Bulk consumers will face a 15-day stock limit from September 1, aimed at preventing excessive inventory accumulation ahead of the festive season.
To strengthen domestic availability, the government has approved duty-free imports of 10 lakh tonnes of raw sugar. The additional imports are expected to supplement domestic supplies and help contain price pressures.
The government has also advised states and sugar mills to begin the new crushing season from October 15. Sugar production in October is expected to exceed 10 lakh tonnes, which could significantly improve availability during the festive period.
The government has therefore maintained that there is no need to link the current sugar-price increase with India's ethanol blending programme. The declining share of sugar diverted for ethanol and the growing contribution of grain-based ethanol are key factors cited in support of its position.
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