Sugar has turned into one of the costlier items on the kitchen shelf in recent weeks, with both retail and wholesale prices climbing sharply amid tightening domestic supplies.
How Much Have Prices Risen?
Retail sugar prices in India have gone up 20% over the past year, touching Rs 55.7 per kg as of Aug. 20, compared to Rs 46.3 per kg a year earlier, according to Department of Consumer Affairs data.
The increase has been especially steep in recent weeks, prices stood at Rs 48.2 per kg just a month ago and Rs 50.9 per kg a week ago, pointing to a sharp acceleration rather than a gradual climb.
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The wholesale market has moved even faster. In Kolhapur, one of the country's key sugar trading hubs, spot prices jumped 30% in a single month, rising from Rs 4,400 to Rs 5,750 per quintal between July 22 and Aug. 20, per NCDEX data.
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What's Driving The Shortage?
The price surge has been linked largely to expectations of tighter supply, driven by weak rainfall and crop damage across India's major sugarcane-growing states, including Uttar Pradesh, Maharashtra and Karnataka.
Concerns over hoarding amid these supply worries have added further pressure on prices.
To ease the crunch, the government has permitted duty-free imports of 10 lakh metric tonnes of sugar, the first such move in a decade, while also capping how much stock bulk buyers and dealers can hold to discourage hoarding.
ALSO READ: India Allows Duty-Free Import Of 1 Million Tonnes Of Raw Sugar To Curb Record Prices
Shrinking Stockpiles?
India's sugar stocks, the buffer that protects consumers from supply shocks, have been declining steadily over the past five years.
Closing stocks stood at 95-96 lakh metric tonnes in 2021-22 and 2022-23, before falling to 84 lakh metric tonnes in 2023-24 and 60 lakh metric tonnes in 2024-25.
Stocks are now projected to drop further to 43 lakh metric tonnes by the end of September this year, the lowest level in five years, according to data from the US Department of Agriculture's Foreign Agriculture Service and ratings agency ICRA.
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ALSO READ: 25% Return In Five Sessions: This Sugar Stock Jumps 18% Even As Govt Tightens Stockholding Limits
Is Ethanol Blending To Blame?
A common theory doing the rounds is that increasing diversion of sugar towards ethanol production, part of India's push for 20% ethanol blending in petrol, is squeezing supply. However, the data tells a different story.
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The quantity of sugar diverted for ethanol has stayed relatively steady over the years even as overall sugar output swung considerably, 36 lakh metric tonnes were diverted in 2021-22 out of a total 369 lakh metric tonnes produced, and 34 lakh metric tonnes in 2025-26 out of an estimated 280 lakh metric tonnes, per Ministry of Consumer Affairs and industry data.
In other words, the proportion diverted to ethanol hasn't grown enough on its own to explain the current squeeze, suggesting the fall in overall cane output — rather than ethanol demand — is the bigger factor behind tightening supplies.
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