Sugar prices in India have reached record levels ahead of the festive season, prompting the government to consider measures including reducing import duties and increasing domestic availability. The price rise has renewed debate over the balance between food supplies and the country's ethanol-blending programme.
The timing has raised concerns because demand for sugar typically increases during the festive season, with Ganesh Chaturthi, Dussehra and Diwali approaching. Higher prices could affect households as well as sweet manufacturers, food-processing businesses and other bulk consumers.
One factor being debated is the diversion of sugarcane towards ethanol production. India has expanded its ethanol-blending programme to reduce dependence on imported crude oil and move towards its E20 target, under which petrol can contain up to 20% ethanol.
Sugarcane is one of the feedstocks used for ethanol production, alongside crops such as maize and rice. According to industry data cited in reports, sugarcane accounts for roughly 30–35% of ethanol feedstock.
The situation has been complicated by lower sugar recovery and productivity in some regions. Panwar pointed to crop disease in Uttar Pradesh during the 2025-26 season as one factor affecting output, despite an increase in sugarcane acreage.
The government has already taken steps to protect domestic supplies. India, traditionally one of the world's largest sugar exporters, has sharply restricted exports in recent years. For the 2025-26 season, an export quota of around two million tonnes was permitted, far below the more than 12 million tonnes exported in 2021-22.
Despite these measures, prices have continued to rise. Reports now suggest that the government is considering removing or reducing the 100% import duty on sugar, potentially allowing cheaper overseas supplies into the domestic market.
The price increase has revived a broader debate over India's ethanol policy. Chief Economic Adviser V Anantha Nageswaran has argued that the government should carefully assess the food-versus-fuel trade-off before increasing ethanol blending beyond E20.
