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The Directorate General of Foreign Trade permitted refiners to bring in up to one million tonnes of raw sugar at zero duty until October 31, according to its notification issued on August 20. Production estimates for the October 2025 to September 2026 season have been cut to 30.6 million tonnes from an initial 34.3 million tonnes, a downward revision of 11 percent that government data attributes to lower cane yields, red rot disease and waterlogging in major states. The Indian Sugar Mills Association projected net output after ethanol diversion at roughly 27.9 million tonnes with closing stocks of 3.5 million tonnes, a level industry president Niraj Shirgaokar described as a healthy buffer against annual consumption of 28 million to 29 million tonnes. Shirgaokar told reporters on August 24 that stocks and monthly releases remain comfortable despite the revision.
Sugar prices climbed from around 48 rupees per kilogram in July to between 55 and 60 rupees in August, an increase of 15 to 40 percent depending on the market, according to retail tracking by the ministry of consumer affairs. A senior analyst at PhillipCapital India told BBC News that the swing from approving 2 million tonnes of exports early in the season to ordering imports represented a large variation in production estimates that came as a surprise. Nearly 800,000 tonnes had already been shipped before the government halted exports in May, leaving tighter supplies as demand accelerates for festivals and the subsequent wedding season.
Erratic monsoon rains and prolonged dry spells in Maharashtra, Uttar Pradesh and Karnataka reduced sucrose content in cane, according to assessments from the agriculture ministry and the Indian Sugar Mills Association. The area under sugarcane cultivation expanded to 58.87 lakh hectares in 2025-26 from 49.27 lakh hectares a decade earlier, a government factsheet released this week showed, yet recovery rates fell short of expectations. ISMA has directed mills to begin crushing cane by mid-October, two weeks earlier than normal, in an effort to replenish stocks before the new harvest fully arrives.
Confectioners and food manufacturers face higher input costs at a time when the festive window accounts for as much as 35 percent of annual organised sweets sales, according to industry estimates compiled by Mint newspaper. Some sweet makers in Vadodara and Bengaluru have absorbed sugar and ghee price rises of 10 to 15 percent to hold retail mithai prices steady through Diwali, while others plan selective increases on premium items. Bulk buyers have also accelerated purchases, adding to wholesale pressure that prompted the government to cap trader stocks at 400 tonnes and limit bulk consumer holdings to 15 days of requirements.
Globally, sugar production is forecast to decline to 184.9 million tonnes this season from 186.1 million tonnes the previous year, United States Department of Agriculture forecasters indicated. Adverse weather in Brazil, Thailand and Europe has tightened international supplies and lifted London futures to their highest levels since April. Atul Chaturvedi, non-executive director of Shree Renuka Sugars, noted that current high domestic prices make ethanol diversion uneconomic for mills, suggesting availability could improve next season provided forecasts prove more accurate.
The government has disputed suggestions that its ethanol-blending programme is the main driver, stating that the share of cane diverted has fallen from 12 percent in 2022-23 to around 9 percent this season. Former agriculture secretary Siraj Hussain told reporters that initial projections failed to materialise because of unusual weather and disease in certain cane varieties. ISMA officials emphasised that 97 percent of sugarcane dues for the 2025-26 season have already been paid to farmers, reflecting improved mill finances that have reduced reliance on official support.
