Sugar prices have jumped sharply due to lower output, shrinking stocks and the diversion of sugarcane to ethanol. Economist Ashok Gulati warns that delayed imports and a 100% duty have aggravated the crisis just before the festive season.

  • Production down about 10%
  • Ethanol diversion adds supply pressure
  • Delayed imports and 100% duty fuel price surge

India’s sugar market has witnessed a rapid price hike in recent weeks, unsettling both consumers and manufacturers. Agricultural economist Professor Ashok Gulati told India Today that a combination of lower sugar output, depleted stocks and the diversion of cane to ethanol are driving the current crunch.

Gulati notes that opening stocks fell from roughly 8 million tonnes to 5 million tonnes, creating a severe supply gap. Simultaneously, about 10% of the cane crop is being redirected to ethanol production, magnifying the shortage.

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He criticises the government for not recognising the emerging deficit early enough. “Imports should have been opened four or five months ago,” Gulati said, adding that early action could have prevented the sharp price jump.

Why This Matters

BozokMedia analysis shows that a prolonged sugar price surge can ripple through India’s festive season economy, affecting confectionery sales, household budgets, and even export competitiveness. If prices continue to climb, small businesses and rural economies will feel the strain.

"The high import duty and delayed response have locked the market out of its own corrective mechanisms," Gulati explained.

The economist also highlighted that the sugar sector is the most government‑controlled segment of Indian agriculture – from cane pricing to ex‑factory rates and the amount mills can release. He called the system “unprecedented globally” and urged a “fresh wave of liberalisation.”

Gulati pointed out that a 100% import duty on sugar has stifled market flexibility. Alternatives he suggested include importing sugar directly, importing ethanol instead of diverting domestic cane, or encouraging mills to use Food Corporation of India rice stocks to boost sugar output.

Did You Know?: Sugar stocks are at a nine‑year low, the lowest since 2017, forcing the market to rely heavily on imports.

Frequently Asked Questions

Q1: Will the ethanol diversion permanently push sugar prices higher?

A: Introducing market‑driven pricing and allowing flexibility in cane allocation can mitigate the impact.

Q2: How can delayed imports be avoided in the future?

A: Reducing import duties, establishing pre‑emptive import contracts and encouraging strategic stock‑piling are key steps.