Sugar Production Falls, Stocks Cushion Supply: Is India Facing a Shortage?

India’s sugar balance for the 2025-26 marketing year remains tight but it does not point to an outright domestic shortage. The cushion is the opening inventory carried into the season.

The Indian Sugar and Bio-Energy Manufacturers Association (ISMA) estimates net sugar production at about 279 lakh tonnes after 30 lakh tonnes is diverted to ethanol. Gross production is estimated at around 309 lakh tonnes. The season began with 50 lakh tonnes of opening stocks, while annual domestic consumption is projected at 280-285 lakh tonnes.

ISMA expects about 35 lakh tonnes of closing stocks by September-end. India had exported around 8 lakh tonnes before the Centre imposed restrictions, making domestic availability a priority.

The production outlook has weakened from earlier estimates. ISMA initially projected gross output at about 345 lakh tonnes, but subsequently revised it lower because bad weather, excessive rainfall, waterlogging and pests damaged sugarcane in key regions. Red Rot and Top Borer affected crops and reduced sugar recovery. The government’s latest production estimate is around 306 lakh tonnes, confirming the weaker crop outlook.

Ethanol diversion has reduced the quantity of sugar available for direct consumption, but the government disputes claims that ethanol is the principal cause of the price spike. It points out that the proportion of sugar diverted to ethanol has fallen from about 12 per cent in 2022-23 to roughly 9 per cent in 2025-26.

Despite net production being marginally below projected annual consumption, opening stocks provide a buffer. ISMA says India has enough sugar to meet domestic requirements, while the government has added safeguards to prevent temporary tightness from becoming a shortage.

Those safeguards include 10 lakh tonnes of duty-free raw sugar imports until October 31, tighter stock-holding limits, export restrictions and action against hoarding and speculation. The government has also encouraged mills to begin the next crushing season earlier, increasing supplies during the festive period.

The immediate challenge is therefore less about physical availability than managing stocks, market sentiment and prices until fresh production begins.