India's sugar output down 18% from peak as demand rises, tightening supply balance: Exencial Research
New Delhi, June 21
India's sugar industry is facing a tighter supply-demand situation as production has fallen sharply from its peak while domestic consumption continues to rise, according to a sector note by Exencial Research Partners.
The report, titled "India Sugar: The Squeeze, The Cycle, The Shift", said sugar output has declined around 18 per cent from its FY22 peak, even as domestic demand has climbed to record levels.
"Output has slipped ~18% from FY22 peak, while domestic demand keeps climbing. Buffer stocks are now back to multi-year lows," the report said.
According to the sector note, India's sugar production fell to 29.3 million tonnes (MT) in FY25, an 8 per cent year-on-year decline and a four-year low. In contrast, domestic consumption reached a record 29.0 MT in FY24, reflecting continued growth in demand.
The report highlighted that the industry's supply cushion has narrowed significantly over the past few years.
"The cushion between supply and demand has shrunk to ~0.3 MT in FY24, the tightest in a decade," the report noted.
Data in the report showed that sugar production peaked at 35.8 MT in FY22 before declining to 32.8 MT in FY23, 32.0 MT in FY24 and further to 29.3 MT in FY25.
The report said the industry's outlook now depends heavily on the upcoming crop cycle and government policy decisions.
"With FY25 cane output below ISMA's earlier estimate, the cycle now hinges on FY26 monsoon & ethanol diversion policy," it added.
On the export front, the report said India's sugar export revenues remain well below their FY23 peak, although there are signs of stabilisation.
"FY26 export revenues tracked sideways for three quarters, then surged +34% QoQ in Mar-26 -- the biggest sequential jump since the FY22 boom unwound," the report said.
India's sugar export revenue stood at USD 2.09 billion in FY26, down 64 per cent from the FY23 peak of USD 5.77 billion. However, export earnings in the March 2026 quarter rose 34 per cent quarter-on-quarter to USD 593 million, indicating a recovery in trade activity.
The report also pointed to a shift in India's sugar export destinations. While Indonesia and Bangladesh were among the largest buyers during the FY22 export boom, African and Gulf nations now account for the bulk of shipments.
"During the FY22 boom, Indonesia & Bangladesh anchored exports. In FY26, Africa & the Gulf are doing the heavy lifting -- six of the top seven destinations," the report said.
Among the leading destinations in FY26 were Somalia, Sudan, Djibouti, Sri Lanka, Tanzania and the UAE, highlighting a changing geography of India's sugar trade.
— ANI
Reader Comments
Interesting shift in export destinations - from Indonesia and Bangladesh to Africa and Gulf. Shows how global trade dynamics are changing. But we need to ensure domestic supply first. 🇮🇳
As someone who follows commodity markets, the 18% drop from FY22 peak is significant. The 0.3 MT cushion is extremely tight. Monsoon performance will be critical for FY26.
My family runs a small sweet shop in Pune. We've already seen prices go up by 15% this year. Hope the government doesn't restrict sugar too much for ethanol - our mithai business depends on stable supply. 😟
Good analysis from Exencial. The report rightly highlights the policy dilemma - ethanol vs food. We need a sustainable approach that supports both energy security and consumer needs. The FY26 monsoon will decide a lot.
The export revenue decline from $5.77B to $2.09B is steep. But the 34% QoQ surge in March 2026 is promising. Africa and Gulf becoming top destinations makes sense given proximity and trade relationships.
We need a long-term policy for sugar. Every year it's either surplus or shortage. Better forecasting and stable ethanol blending targets would help farmers plan. The 0.3 MT cushion
We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.