India’s Sugar Industry

Key Highlights:

• India is the world's second-largest sugarcane producer, supporting nearly 5 crore farmers and 5 lakh sugar factory workers.
• Sugarcane production reached 500 MMT in 2025-26, marking a 43.5% growth over the last decade.
• The Fair and Remunerative Price (FRP) for sugarcane for the 2026-27 season has been set at ₹365/quintal with a 10.25% basic recovery rate.
• The Ethanol Blending Programme has helped manage sugar surplus, improved sugar mill finances, and ensured 97% payment of farmer dues for 2025-26.
• A recent 15.6% sugar price hike (July-August 2026) is attributed to lower production, festive demand, global factors, and speculation.
• Government imposed a stock limit of 400 tonnes on sugar dealers and permitted duty-free import of 10 lakh MT of raw sugar.
• States and sugar mills have been advised to begin crushing from October 15, 2026, to augment supply during the festive season.

Detailed Insights:

• The area under sugarcane cultivation increased from 49.27 lakh hectares in 2015-16 to 58.87 lakh hectares in 2025-26.
• Uttar Pradesh and Maharashtra are the leading sugarcane-producing states in India.
• India exported 8 lakh MT of sugar in 2025-26, a significant rise from 0.47 lakh MT in 2016-17, primarily to Sri Lanka, West Asia, and East Africa.
• The Ethanol Blending Programme aims to reduce dependence on fossil fuels, enhance energy security, and provide stable income to farmers.
• The share of sugar diverted for ethanol production declined from 12% in 2022-23 to 9% in 2025-26, with nearly three-fourths of ethanol now sourced from grains, particularly maize.
• Diversion of excess sugar to ethanol has addressed the structural problem of surplus stocks, which previously blocked funds and delayed farmer payments.
• Retail sugar prices increased by only about 3% annually between August 2024 and July 2026, indicating the current hike is a short-term market fluctuation.
• Lower-than-expected domestic production (306 LMT vs. 343 LMT initial estimate) is due to Red Rot, Top Borer disease, and waterlogging from excess rainfall.
• The global sugar deficit for 2026-27 is estimated at 33 lakh MT, contributing to a 16% rise in international sugar prices.
• Government measures also include restricting bulk consumers from holding sugar stocks exceeding 15 days of consumption from September 1, 2026.
• Joint teams of central and state government officials are conducting physical verification of sugar stocks at mills to check for hoarding.

Key Concepts Involved:

• Fair and Remunerative Price (FRP): The minimum price that sugar mills are legally bound to pay to sugarcane farmers for their produce.
• Ethanol Blending Programme: A government initiative to mix ethanol with petrol to reduce crude oil imports, enhance energy security, and promote sustainable fuel.
• Stock Limit: A government-imposed ceiling on the quantity of a commodity that can be held by traders or dealers to prevent hoarding and artificial price manipulation.