While people are still waiting for cheaper petrol, the price of sugar is creating a new headache. Sugar prices in India have risen by around 10% over the past month. In Maharashtra’s Kolhapur, wholesale prices have jumped nearly 20% since the beginning of August, reaching around ₹5,350 per quintal. The average retail price of sugar in the country is around ₹52 per kg, while in some markets it has reached ₹60 to ₹65 per kg. The rise has also triggered a political debate, with Arvind Kejriwal criticizing the government’s ethanol policy and the Congress raising similar questions.
Sugar Gets Costlier as Ethanol Demand Rises
The key issue is simple: ethanol was promoted as a way to reduce crude oil imports and save foreign exchange, so why are sugar prices reaching such high levels at the same time? Reports suggest the government is even considering importing sugar to meet domestic demand. During the 2025–26 sugar season, sugar equivalent to around 31 lakh tonnes that could have been produced from sugarcane was instead diverted toward ethanol production. With the festival season approaching and sugar demand expected to rise, domestic supplies are coming under increasing pressure.https://www.indiatoday.in/india/story/sugar-prices-all-time-high-cane-diverted-to-e20-government-import-duty-cut-crisis-2974938-2026-08-19
India’s Sugar Supply Is Under Pressure
The estimated total sugar production in India for the 2025–26 sugar season is around 3.11 crore tonnes. However, approximately 31 lakh tonnes of sugar equivalent has been diverted toward ethanol production. This does not mean that India is running out of sugar; it means that less sugar is entering the market. Net sugar production is estimated at around 2.8 crore tonnes, while annual domestic consumption is approximately 2.83 crore tonnes. On top of this, around 7 lakh tonnes have been exported. The gap is being managed through existing stocks, but those reserves are also declining. According to ICRA, India’s remaining sugar stock could fall to around 43 lakh tonnes by September 2026, compared with approximately 53 lakh tonnes a year earlier a decline of around 10 lakh tonnes. While 43 lakh tonnes sounds substantial, it represents only around two months of domestic consumption. The timing is important because sugar demand typically rises between August and November during Ganesh Chaturthi, Dussehra and Diwali. Sweet manufacturers, biscuit and confectionery companies, beverage companies and households all increase their requirements during this period. So, the market is facing higher demand just as its supply cushion is becoming smaller.
From Sugar Exports to Sugar Imports
The government has already taken several measures to control the situation. Sugar exports have been restricted, limits have been imposed on traders’ stocks, and reports suggest that the government is considering importing around 10 lakh tonnes of raw sugar without import duty. India was once a major sugar exporter. In 2021–22, the country exported more than 1.2 crore tonnes of sugar. For 2025–26, the government initially allowed exports of 15 lakh tonnes and later increased the limit to 20 lakh tonnes. After around 7 to 8 lakh tonnes had been exported, exports were stopped in May. In other words, India went from exporting sugar to restricting exports and now potentially importing sugar. The government is also monitoring stocks to prevent traders from holding large quantities and creating an artificial shortage. Reports suggest that wholesale buyers holding more than 10 tonnes may be restricted to keeping around 15 days of stock. The objective is clear: keep sugar moving into the market and prevent prices from rising further. But this raises the bigger question why has the situation become so tight in the first place?https://unbiasedpollkhol.com/
The E20 Ethanol Question: Fuel vs Food
This is where India’s ethanol policy enters the picture. Over the past few years, the government has strongly promoted ethanol blending in petrol to reduce crude oil imports and save foreign exchange. India reached around 19.24% ethanol blending in 2024–25 and set a 20% target for 2025–26. Ethanol production capacity has also expanded rapidly, reaching around 1,953 crore litres annually by October 2025. But ethanol requires raw materials, including sugarcane juice, molasses and other sugar-based feedstocks, as well as maize and rice. This means a portion of India’s sugarcane is no longer being used exclusively for sugar production; it is also being directed toward ethanol. The estimated 31 lakh tonnes of sugar equivalent diverted to ethanol this season is significant when domestic sugar stocks are already under pressure. Ethanol certainly has benefits: it can reduce dependence on imported crude oil, save foreign exchange and provide farmers with an additional market for sugarcane. But there is a trade-off. If more sugarcane is diverted toward ethanol, sugar availability can fall. And if maize and rice are increasingly used for ethanol, the issue could extend beyond sugar. Maize is also important for poultry and animal feed, while rice is directly connected to the food market. Chief Economic Adviser V. Anantha Nageswaran has also emphasized the need to carefully consider the food versus-fuel trade-off before increasing ethanol blending beyond E20. The point is not necessarily that ethanol should be abandoned. The real question is whether the benefits of filling the petrol tank are being calculated alongside the potential impact on the kitchen budget. If the push for higher ethanol blending eventually puts pressure on food prices, the success of the policy will have to be measured not only at the fuel pump but also in the household kitchen.
We’re doomed with these 2 decisions