Untangling the sources of India’s sugar price spike
High sugar prices in India are largely driven by domestic factors. Falling production, low stocks, and tight supplies matter more than global market trends.
- food crises
- food prices
- Markets
- value chains
By Deepayan Debnath, Parthapratim Pal, and Suresh BabuOctober 28, 2026
Key takeaways
- High sugar prices in India are largely driven by domestic factors. Falling production, low stocks, and tight supplies matter more than global market trends.
- Ethanol demand is squeezing sugar supplies. Continued diversion of sugarcane to ethanol has added pressure to an already tight market.
- More flexible policies could stabilize prices. Better stock management, adaptive blending targets, and alternative feedstocks could reduce future shocks.
A spike in domestic sugar prices in India has triggered a contentious political debate and finger-pointing. While the opposition blames national policies that divert a significant portion of sugar juice to ethanol production, government briefings are blaming alleged hoarding by sugar mills to conserve their stocks ahead of the upcoming festive season.
To put this debate in perspective, one is forced to look at the hard evidence. From January to July 2026, sugar prices increased by an average of 3% compared to the same period the previous year. In August alone, the increase was 30% over July’s price (Figure 1). During the same period, India’s annual overall inflation rate was 4.95% (S&P Macro data, July 2026).