Lower Stocks, Rising Prices Prompt Sugar Industry to Advance Cane Crushing

India's sugar industry has proposed to begin the 2026-27 sugar crushing season 10-15 days earlier than the normal schedule to boost domestic supplies and stabilise record-high sugar prices ahead of the festive season.

The move comes as the Central Government has tightened market oversight by imposing stock holding limits on sugar dealers and ordering physical verification of sugar stocks held by mills to curb hoarding and speculative trading.

The decision follows a sharp rise in ex-mill sugar prices, which have increased by nearly 15 per cent over the past month, raising concerns over inflation and sugar availability during the festive season.

Industry to Begin Crushing Earlier

The proposal, jointly announced by the Indian Sugar & Bio-energy Manufacturers Association (ISMA) and the National Federation of Cooperative Sugar Factories Ltd. (NFCSF), follows consultations with the Union Food Ministry.

Subject to favourable agro-climatic conditions, the industry plans to commence the 2026-27 crushing season around 10-15 days earlier than usual, allowing fresh sugar to reach the domestic market before peak festive demand.

In a joint statement, ISMA Director General Deepak Ballani and NFCSF Managing Director Prakash Naiknavare said, "The Indian sugar industry stands firmly with the Government of India in addressing the current concerns regarding sugar availability. The industry has chosen to act in the larger national interest by proposing to advance the commencement of the crushing season to ensure adequate availability of sugar and maintain price stability."

The industry maintained that the recent rise in sugar prices does not reflect the underlying demand-supply fundamentals. According to ISMA and NFCSF, the average pan-India ex-mill sugar price remained around Rs. 39.5-40 per kg until June during the current 2025-26 sugar season, below the estimated cost of production. Even after the recent increase, the season's average ex-mill realisation until the end of July stood at Rs. 40-40.5 per kg, still below the estimated production cost of around Rs. 42 per kg.

Industry Seeks Government Support

While advancing the crushing season is expected to improve sugar availability before the festive period, the industry acknowledged that the decision would have significant operational and financial implications for mills. Starting operations before sugarcane reaches optimum maturity is likely to reduce sugar recovery and cane yields, affecting mill efficiency and profitability.

To offset these losses, ISMA and NFCSF have requested government support through measures such as compensation for sugar recovery losses, additional domestic sugar sale quota equivalent to October production, or waiver of Central Goods and Services Tax (CGST) on domestic sugar sales.

Production Below Consumption for Second Consecutive Year

Despite the industry's assurances, concerns over tightening sugar supplies persist. India's sugar production is expected to remain below domestic consumption for the second consecutive year. Industry estimates suggest sugar production during the 2025-26 season will be around 27.9 million tonnes against domestic consumption of about 28.5 million tonnes.

At the beginning of the season, production was estimated at nearly 30.9 million tonnes, but output declined due to a weak monsoon and lower sugarcane productivity. Uttar Pradesh recorded its lowest sugar production in nearly a decade, while Maharashtra also produced less than initially anticipated.

Exports and Ethanol Diversion Reduce Stocks

Supply concerns have been compounded by sugar exports and diversion of sugarcane towards ethanol production. The Centre permitted exports of 1.5 million tonnes of sugar in December 2025 and an additional 0.5 million tonnes in February 2026. Although exports were suspended in May 2026, nearly 0.8 million tonnes had already been shipped.

Industry estimates indicate that India's opening sugar stock on October 1, 2026—the beginning of the new sugar season—could decline to 3.3-3.5 million tonnes, the lowest opening inventory in several years. If crushing operations begin on the normal schedule, sugar availability could tighten further during October and November, making the industry's proposal to advance crushing particularly significant.

Government Imposes Stock Holding Limits

To prevent hoarding and speculative trading, the Central Government has imposed stock holding limits on sugar dealers from August 1 to November 30, 2026.

Under the order issued by the Department of Food and Public Distribution, no sugar dealer can hold sugar stocks for more than 30 days from the date of receipt or maintain inventories exceeding 4,000 quintals at any time or location.

Under the new regulations, all sugar dealers are required to declare their sugar stocks and update their inventory every week through the Department of Food and Public Distribution's online portal.

Physical Verification of Sugar Stocks

The stock limits follow another enforcement measure announced on July 24, under which the Department of Food and Public Distribution ordered nationwide physical verification of sugar stocks held by all sugar mills between August 1 and August 14.