Sugar prices have risen sharply ahead of the festive season, prompting concerns over supplies and retail costs. Agricultural economist Ashok Gulati has linked the pressure to lower output, depleted stocks, ethanol diversion and what he described as delayed corrective action.

The government has announced measures including dealer stock limits, bulk-consumer restrictions and duty-free raw sugar imports. Gulati argues that earlier imports and broader policy changes could have reduced the supply strain.

Sugar Prices Surge As Supply Concerns Deepen

India’s sugar market is facing renewed pressure as festive-season demand approaches. Professor Ashok Gulati said lower sugar production, falling opening stocks and diversion of sugarcane toward ethanol have combined to tighten supplies.

Gulati said opening stocks had declined from around 8 million tonnes to about 5 million tonnes. He argued that the reduced stock cushion left the market more vulnerable when production weakened.

According to Gulati, sugar production is down by around 10 per cent. In such a situation, even a limited diversion of cane toward ethanol can have a larger cumulative effect on sugar availability, he said.

The economist warned that prices could rise further before supply conditions improve, especially as demand traditionally increases during the festival period. His comments have brought the balance between sugar production, ethanol policy and consumer prices back into focus.

Ashok Gulati Sugar Price Warning Targets Delayed Imports

Gulati argued that the government should have identified the supply risk earlier and allowed imports several months ago. In his view, a timely decision could have prevented the market from reaching a stage of critically low stocks.

He said policymakers had alternatives, including earlier sugar imports, importing ethanol rather than diverting domestic cane toward ethanol production, or encouraging greater sugar output. These are Gulati’s policy suggestions and not current government decisions.

The economist also criticised India’s high import duty on sugar, saying it had slowed the market’s ability to respond to an emerging shortage. He maintained that a more flexible import policy could help stabilise supplies in periods of low domestic output.

The government has, however, recently announced duty-free imports of 10 lakh metric tonnes of raw sugar as a precautionary step to augment domestic availability. It has also said crushing should begin from October 15, earlier than usual, to improve October production during the festive season.

Ethanol Diversion Sugarcane Impact Adds To Debate

The debate over ethanol diversion reflects a wider policy challenge. India’s ethanol-blending programme is intended to reduce dependence on fossil fuels and support alternative demand for agricultural feedstock. However, when sugar availability falls, the use of cane for ethanol can become a sensitive issue.

Gulati said mills and farmers should be allowed greater flexibility to respond to prevailing market prices when deciding between sugar and ethanol production. He pointed to Brazil as an example of an industry that can switch between the two based on market conditions.

His broader argument is that market signals should play a stronger role in the sector. Gulati described sugar as one of the country’s most heavily controlled agricultural industries, citing policy influence over cane prices, ex-factory prices and market releases.

These views are part of a continuing policy debate. Supporters of tighter controls argue that government intervention can protect consumers and farmers during periods of price volatility, while advocates of liberalisation say greater flexibility could improve supply responses.

Government Sugar Stock Limits 2026 Aim To Curb Pressure

The government has announced several steps to manage the rise in sugar prices. A 400-tonne stock limit has been imposed on sugar dealers from August 1 through November 30, while bulk consumers will face limits on holdings from September 1.

Officials have also begun physical verification of sugar stocks at mills to check hoarding and artificial scarcity. The measures are intended to improve availability and prevent excessive stock accumulation as demand rises.

The government’s response and Gulati’s criticism differ mainly on timing and policy design. While the Centre has moved to restrict stocks, permit duty-free raw sugar imports and encourage early crushing, Gulati says earlier action and a more liberal framework would have been more effective.

Sugar prices will remain closely watched in the coming weeks. The key factors will be the speed of imports, the start of crushing operations, the availability of cane and whether anti-hoarding measures improve supplies before peak festive demand begins.