India is facing an unexpected sugar supply crunch just as the festive season gets underway, pushing prices sharply higher across major cities. Retail sugar prices have reportedly increased by around 40% in just a fortnight, creating concerns for consumers as demand traditionally rises during festivals such as Onam and Raksha Bandhan.
The situation is particularly striking because the sugar industry had initially expected a surplus during the current 2025-26 sugar season, which began on October 1, 2025, and will end on September 30, 2026. At the start of the season, higher sugar production and lower diversion of sugar towards ethanol were expected to result in larger available stocks. Mills had also sought permission to export more sugar to prevent excess inventories and delays in payments to sugarcane farmers.
The Indian Sugar and Bio-energy Manufacturers Association (ISMA), in its first preliminary estimate released in July 2025, had projected sugar production at around 34.90 million tonnes (MT) for the 2025-26 season. That estimate represented an increase of about 18.3% compared with the previous season’s production of 29.6 MT. The higher production outlook was also reiterated during ISMA’s annual conference in September.
The sharp rise in sugar prices has also raised concerns about broader inflationary pressure on household budgets. Market watchers are keeping a close eye on sugar availability and prices, while consumers could face higher costs for sweets and other products that use sugar if the supply situation remains tight.
