India has authorized its first major sugar imports in nearly a decade after domestic prices surged ahead of the festival and wedding season. The government is allowing up to one million tonnes of raw sugar to enter duty-free as lower-than-expected production, stronger seasonal demand, weather damage, and tighter global supplies put pressure on the market.
The Indian government said sugar prices rose from ₹48.18 per kilogram on July 20 to ₹55.70 on August 20. Prices in some individual markets climbed above ₹58 to ₹60 per kilogram during August.
Lower Production Left India With Less Sugar to Spare
India is the world’s largest sugar consumer and one of its biggest producers, but output has fallen short of earlier expectations during the 2025-26 season.
Demand typically increases from August as Ganesh Chaturthi, Dussehra and Diwali approach, followed by India’s busy wedding season. Food and beverage companies also build inventories during this period.
The pressure was intensified by sugar exports earlier in the season. India initially permitted 1.5 million tonnes of exports before increasing the allowance to two million tonnes in February. About 800,000 tonnes had been shipped before exports were stopped in May.
India also consumes more than 28 million tonnes of sugar annually, leaving relatively little room to absorb a significant production shortfall.
Government Allows One Million Tonnes of Duty-Free Imports
On August 20, India authorized duty-free imports of up to one million tonnes of raw sugar through October 31.
Port-based refineries in special economic zones, which normally process imported raw sugar for re-export, are also being allowed to sell refined sugar domestically.
The government has imposed a 400-tonne stock limit on sugar dealers through November and will restrict bulk consumers to stocks equivalent to 15 days of consumption from September. Mills have also been encouraged to begin crushing sugarcane from October 15 to bring new supplies to market earlier.
Weather and Ethanol Add to the Supply Debate
Sugarcane crops have been affected by uneven rainfall, dry periods and disease in major producing states including Maharashtra, Uttar Pradesh and Karnataka.
Some industry observers have also questioned the diversion of sugarcane into ethanol as India expands its E20 petrol program. Roughly three million tonnes of potential sugar output is expected to be diverted toward ethanol this season.
The government disputes that ethanol is responsible for the price increase. It says the proportion of sugar diverted for ethanol has fallen from about 12% in 2022-23 to around 9% in 2025-26, while most ethanol is now produced from grains.
Global conditions have added further pressure, with weather affecting sugar production in Brazil, Thailand and Europe.
India’s decision to import has already affected international markets. Reuters reported that raw sugar futures rose as much as 4% following the announcement.
Featured image credits: Pickpik
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