Indian Sugar Prices Soar as Government Hesitates on Exports

India's sugar prices have risen by 12% due to a tightening domestic market. The government is hesitant to permit sugar exports in 2026/27 as it tries to control food and energy inflation.

The Indian Sugar Market remains tight, with the government under pressure to balance food and fuel inflation. A poor monsoon season, combined with high world oil prices, will add to this pressure.

India is looking at ways to better utilise its ethanol production capacity, including increasing ethanol's blend in petrol and introducing flex-fuel vehicles. However, consumers have raised concerns about ethanol providing lower mileage than gasoline, and critics have highlighted the impact on food and water security from increasing sugarcane and grains cultivation for fuel.

The government may need to increase ethanol prices to encourage mills to divert more sucrose to ethanol production. Currently, sugar prices are higher in Northern India than in Maharashtra, which could make it difficult to encourage diversion to ethanol in this part of the country.