India’s sugar imports: India may soon start importing sugar after a gap of nearly a decade. The government plans duty free import of up to one million tonne sugar as domestic stocks tighten and wholesale prices rise ahead of the festival season. Sugar prices in Kolhapur have touched ₹5,350 a quintal. Stockholding limits on dealers and bulk consumers are already in force.
The prospect of imports follows an abrupt change in the government’s assessment of the market. India entered the 2025-26 season expecting enough sugar to permit exports. By May, exports had been prohibited. Three months later, imports were under consideration. Production did fall short of early estimates, but the speed of the reversal raises questions about how those estimates were used when export permissions were granted.
READ | Coal gasification can cut imports, but at a high cost
How the expected surplus disappeared
The government allowed exports of 1.5 million tonnes in November 2025. The quota was later reallocated among mills and increased only marginally; by early May, total authorised exports stood at about 1.59 million tonnes. Exports were stopped when the production outlook weakened. By then, roughly 0.8 million tonnes had already been shipped.
Estimates of the crop had been falling for some time. In February, the Indian Sugar and Bio-energy Manufacturers Association reduced its estimate of net sugar production for 2025-26 to 29.3 million tonnes from 30.95 million tonnes. By late May, ICRA estimated net production at about 28 million tonnes after diversion to ethanol, against domestic consumption of 28.3 million tonnes. It projected stocks at the end of September at about 4.3 million tonnes, compared with 5.3 million tonnes a year earlier.
Later assessments put production closer to 27.9 million tonnes and consumption around 28.5 million tonnes. With sugar already exported, stocks available at the start of the next season were expected to be considerably lower. By early August, trade estimates suggested that opening stocks on October 1 could be around 3.5 million tonnes.
Exporting sugar was defensible when production appeared likely to leave a substantial surplus. The difficulty arose as that surplus narrowed. Export approvals committed stocks that could not be recovered when estimates were subsequently lowered. A commodity vulnerable to weather and changes in cane yields requires a larger margin for forecasting errors before exports are permitted.
Government controls amplify forecasting errors
Few agricultural commodities in India are regulated as extensively as sugar. The Centre fixes the Fair and Remunerative Price for sugarcane and regulates the quantity of sugar that mills can sell each month. It also controls foreign trade and determines policy on the diversion of cane to ethanol.
The FRP was ₹355 a quintal for 2025-26 and has been raised to ₹365 for the season beginning in October 2026. According to the government, the sugar industry supports about five crore sugarcane farmers and their dependents and directly employs around five lakh workers.
These interventions make estimates of production and inventories central to the way the market is managed. Export quotas are based on expected availability. Monthly release orders affect the timing of sales, while ethanol policy removes part of the crop from sugar production. If the crop estimate proves too high, each of these decisions can reduce the stock available for domestic consumption.
READ | Capital goods imports test India’s self-reliance push
Higher sugar prices have improved mill realisations at a time when many mills are still clearing payments to growers. As of April 20, mills had paid ₹99,961 crore out of ₹1,12,740 crore due for cane supplied during the 2025-26 season, leaving more than ₹12,000 crore unpaid.
Imports of one million tonnes, if approved, need not undermine mill finances. Their effect will depend on the landed price and the quantity that actually enters the market. If imports reduce prices from current highs without pushing them below viable levels for mills, consumers would receive some relief while mills could continue clearing cane dues.
The longer-term problem is the recurrence of large swings in the sugar cycle. High prices encourage greater cane cultivation and give mills an incentive to expand output. A subsequent surplus then creates demands for exports and other support. When prices weaken sharply, mill cash flows suffer and cane arrears can rise. Trade policy has repeatedly been used to deal with these fluctuations after they appear.
Ethanol has narrowed the stock cushion
Ethanol production now claims a significant share of the cane crop. Around 3.1 million tonnes of sugar equivalent was expected to be diverted towards ethanol in 2025-26. That diversion improves mill revenues and supports the government’s fuel-blending programme, but it also reduces the quantity of sugar available for sale.
The allocation has to respond to the condition of the sugar market. When inventories are large, greater diversion to ethanol can absorb part of the surplus. A season of declining production requires an earlier reassessment because the same cane cannot supply both markets.
The government is considering reducing the use of sugarcane juice and B-heavy molasses for ethanol and relying more heavily on other feedstocks. Such adjustments should become part of a rule-based system rather than decisions made after sugar stocks have already tightened.
Expected production, opening inventories and domestic demand can be used to determine how much sugar equivalent is available for ethanol. Export permissions can be subjected to the same calculation. The government would then know how much sugar could leave the food market without reducing closing stocks below a predetermined minimum.
READ | Gold imports, oil prices expose limits of austerity calls
Sugar imports: A stock buffer can discipline policy
The events of this season make the case for more frequent production estimates during the crushing period. Those estimates should disclose the assumptions used for cane acreage, yields, recovery rates and diversion to ethanol so that changes in the supply outlook can be assessed before trade decisions are taken.
A minimum closing-stock requirement would also impose discipline on export approvals. Exports could be permitted only after projected domestic consumption, ethanol diversion and the required carryover stock had been provided for. If production estimates were cut during the season, the export entitlement could be adjusted before a substantial quantity had left the country.
Such a rule would occasionally prevent mills from taking full advantage of high international prices. That cost has to be weighed against the disruption caused when the government permits exports, subsequently prohibits them and then has to consider imports within the same sugar season.
One million tonnes of imports would be small relative to India’s annual sugar consumption and can address the immediate shortage if the government decides to proceed. The policy failure lies earlier in the sequence. India entered the season with enough confidence in its production forecast to permit exports, only to discover within months that the stock cushion was inadequate. Better crop estimates cannot prevent a poor harvest. Linking trade and ethanol decisions to a minimum stock buffer would make forecasting errors less costly.