Rising sugar production forces change in Indian government strategy

Production growth puts market under pressure

The 2025/26 season brings a marked increase in supply to the Indian sugar sector. Production is expected to increase by almost one-fifth compared to the previous season and exceed 30 million tonnes. Thus, the amount of sugar produced will prove to be higher than domestic demand, which is estimated at just under 29 million tonnes.

This market structure is conducive to the build-up of stocks and will lead to price falls. Already at the beginning of the season, sugar quotations have fallen by several per cent, directly hitting the profitability of sugar mills and the income of cane growers. In response to these challenges, the government has allowed the export of 1.5 million tonnes of sugar, opening up the possibility of selling the surplus on foreign markets.

Exports and ethanol as pillars of the stabilisation strategy

The second key element of the market stabilisation effort is to increase the use of sugar in ethanol production. The plan is to divert around 3.4 million tonnes of raw material to the biofuel sector, thereby simultaneously reducing the surplus on the food market and supporting the achievement of domestic energy targets.

Despite these measures, price pressures persist and the financial situation of some producers remains tight. In this situation, the authorities are examining the possibility of introducing additional safeguard mechanisms, including possible changes to the minimum selling price for sugar on the domestic market. In parallel, work is underway to improve the liquidity of the sector and ensure timely payments to growers.

The increased presence of Indian sugar on overseas markets may also affect the global supply-demand balance, especially in an environment of continued low prices. Decisions taken in the coming months will therefore be important not only for the domestic market, but also for the international sugar sector.