Sugar Prices Soar: Why Ethanol Diversion Is Not To Blame | What’s Really Driving The Spike?

Sugar prices are heating up in India, with retail prices rising sharply from around ₹48 per kg in July to ₹55.70 per kg by August 20. Ex-mill prices have also climbed significantly across major sugar markets. So, what is driving the surge? Lower-than-expected sugar production, crop damage linked to red rot disease and El Niño conditions, higher festive demand, tighter global supplies and concerns over speculation and hoarding are among the factors cited by the government. To improve domestic availability, the government has allowed 10 lakh metric tonnes of sugar imports till October 31, 2026, while also restricting exports and imposing stock limits. India’s imports have also added to global demand. Meanwhile, sugar stocks have rallied, with several companies among the top gainers. The government has also clarified that the recent rise in sugar prices should not be attributed to diversion of sugar towards ethanol production, putting the spotlight on the future of the E20 blending roadmap. So, while sugar companies are benefiting from higher prices, consumers are feeling the pinch — what happens to sugar prices next?