India’s sugar sector is once again in focus as the government considers allowing sugar exports for the 2025–26 marketing season. With production expected to reach 34 million tonnes against a domestic consumption of 28.5 million tonnes, a growing surplus is pressuring market prices and mill liquidity. The decision comes amid a lower-than-expected diversion of sugar to ethanol, intensifying inventory concerns. Policymakers are now examining export options to prevent payment delays to cane farmers and maintain price stability. If approved, the move could provide relief to sugar mills and reaffirm India’s position as a key player in the global sugar trade.
Surplus Production Spurs Policy Debate
India’s sugar output for the 2025–26 season is projected at 34 million tonnes, far exceeding domestic demand of 28.5 million tonnes. This 5.5 million tonne surplus has prompted the central government to consider permitting exports to ease domestic oversupply. According to senior officials from the Ministry of Food and Consumer Affairs, discussions are underway to finalise export volumes, with a ministerial committee expected to meet in the coming weeks.
Food Secretary Sanjeev Chopra confirmed that “the government is definitely having a surplus of sugar this year,” signalling a policy shift aimed at balancing market dynamics and ensuring timely cane payments to farmers.
Ethanol Diversion Misses Target
A key reason behind the surplus lies in the shortfall in ethanol production. The Indian Sugar and Bio-Energy Manufacturers Association (ISMA) estimated that only 3.4 million tonnes of sugar were diverted to ethanol in the 2024–25 cycle—well below the projected 4.5 million tonnes.
The government’s ethanol-blending programme, aimed at reducing crude oil imports and supporting mill liquidity, has struggled with feedstock constraints and pricing bottlenecks. As a result, unsold sugar inventories have swelled, creating a liquidity crunch for mills that rely on ethanol revenue to offset losses from sugar sales.
Industry experts suggest that while ethanol remains a long-term stabiliser for the sector, short-term export relaxation is necessary to clear existing stockpiles and avoid payment delays to sugarcane growers.
Export Economics and Market Realities
Exporting sugar, however, is not without challenges. Global refined sugar prices currently stand around Rs. 3,829 per quintal, slightly lower than India’s ex-mill price of Rs. 3,885 per quintal, making exports of refined sugar less profitable. Nonetheless, raw sugar exports remain economically viable given current international demand trends.
India, which restricted sugar exports since 2022 to ensure domestic price stability, may now re-enter global markets selectively. Analysts believe the government could adopt a calibrated export policy, permitting limited quantities initially while monitoring domestic price movements.
Such a move would not only ease stock pressure but also enhance foreign exchange inflows at a time when India’s agricultural trade balance faces headwinds from restrictions on other commodities like rice and wheat.
Safeguarding Farmers and Market Stability
Beyond export gains, the primary policy objective remains ensuring timely payment to sugarcane farmers. Mills currently owe significant arrears to growers, particularly in Uttar Pradesh and Maharashtra—India’s largest sugar-producing states. Allowing exports would improve cash flows, enabling mills to clear dues and maintain stable procurement operations in the next crushing season.
Experts also warn that prolonged price suppression could deter future investments in cane cultivation, potentially affecting long-term supply. Thus, a balanced export strategy—coupled with improved ethanol blending efficiency—appears essential for sustaining both farmer incomes and mill viability.
Outlook: Balancing Policy, Production, and Profitability
If approved, India’s decision to reopen sugar exports will mark a significant recalibration of its agro-industrial policy. The move underscores the government’s delicate balancing act between domestic affordability, farmer welfare, and export competitiveness.
While global market volatility and ethanol diversification challenges remain, a well-timed export window could help stabilise the domestic sugar economy. As policymakers deliberate, the sector awaits clarity—knowing that the final decision will shape not only the upcoming season but also the future trajectory of India’s sugar and bioenergy industries.
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