Sugar Shock: India Set to Import Sweetener After a Decade as Prices Hit Record Highs

In a striking reversal of fortunes for the world’s second-largest sugar producer, government has allowed duty free import of one million tonnes sugar till October 31, notification states. The impending imports follow a compounding domestic supply crunch, catalyzed by aggressive sugarcane diversion toward green fuel mandates, a total export ban imposed four months ago, and a staggering surge in domestic consumer prices.

Wholesale and retail sugar prices have breached historical thresholds, scaling record highs across major markets. Ex-factory rates have climbed past ₹5,400 per quintal, while wholesale trading centres have witnessed rates surge toward ₹5,800 per quintal. In retail markets, everyday consumers are facing a severe inflationary pinch, with prices soaring between ₹60 to ₹65 per kg in several regions ahead of the peak festive season.

The Ethanol Trade-Off

At the heart of the crisis lies a complex policy bind: the aggressive diversion of sugarcane juice and B-heavy molasses toward ethanol production to fulfil India's ambitious petrol-blending targets and curb surging crude oil import bills. Over successive crushing seasons, millions of tonnes of sugar equivalent were funneled into green energy channels.

While the ethanol programme successfully trimmed crude import expenditures, it steadily eroded the structural surplus mills traditionally held as a buffer. Compounded by lower-than-projected cane production and closing inventories expected to hit a multi-year low of roughly 3.2 million tonnes, the domestic supply cushion has worn dangerously thin.

A Decade-High Pivot

The Directorate General of Foreign Trade (DGFT) had shifted sugar exports from a "restricted" category to entirely "prohibited" on 13 May 2026, in a desperate bid to safeguard domestic inventories. However, the export freeze and subsequent tightening of stockholding limits for bulk traders failed to insulate consumers from mounting price spikes.

With retail rates continuing to boil over, the government is now orchestrating an emergency policy pivot. Authorities are actively weighing duty-free imports of up to 1 million tonnes of raw sugar to cool the domestic market, inject liquidity into depleted reserves, and tame runaway food inflation.