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Key Points

India’s sugar output is projected to surge 15% to 35 million tonnes in 2026 due to favorable monsoon conditions. Higher production will ease domestic supply constraints and support ethanol blending targets. Sugar mills’ margins are expected to recover, benefiting from stable prices and export potential. The sector remains watchful of monsoon distribution and ethanol pricing policies.

Key Points: India Sugar Output to Hit 35 Million Tonnes on Strong Monsoon

  • Sugar production to rise 15% aided by monsoon
  • Ethanol diversion may reach 4M tonnes
  • Exports likely to stay steady at 1M tonnes
  • Mills' margins to recover to 9-9.5%
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India's sugar output to rise 15 pc at 35 million tonnes on favourable monsoon: Crisil

Crisil predicts 15% rise in sugar production to 35 million tonnes in 2026, easing domestic supply and boosting ethanol blending targets.

India's sugar output to rise 15 pc at 35 million tonnes on favourable monsoon: Crisil
"Sugar inventory levels at the end of fiscal 2026 are expected to remain at levels similar to last year, limiting the rise in working capital debt despite higher distillery operations. – Poonam Upadhyay, Crisil Ratings"

New Delhi, June 27

India’s gross sugar production is likely to rise 15 per cent in sugar season 2026 to about 35 million tonnes, aided by above average monsoon, boosting cane acreage and yields in key sugar producing states such as Maharashtra and Karnataka, a Crisil report showed on Friday.

The growth is expected to ease tightness in domestic supply and has the potential to boost ethanol diversion and revive exports with appropriate policy support.

In fiscal 2026, with improved supplies and potentially higher diversion of sugar for blending ethanol with gasoline, the operating margin of sugar mills is likely to recover to about 9-9.5 per cent. This should support credit profiles of sugar players, which saw some pressure last fiscal.

Over the past two seasons, while the fair and remunerative (FRP) price of sugarcane has risen 11 per cent, ethanol prices have largely remained unchanged.

In sugar season 2026, diversion for ethanol is expected to rise to 4 million tonnes (from 3.5 million tonnes in sugar season 2025), supported by high sugar output and the government’s 20 per cent blending target (19 per cent average achieved so far), as it offers faster cash-flow churn, the report mentioned.

Meanwhile, domestic sugar prices have held steady at Rs 35-38 per kg this season. With output expected to rise, sugar prices are likely to remain range-bound.

Exports, at 1 million tonnes in sugar season 2025, can comfortably continue at similar levels in 2026 with high sugar output and opening inventory of 2 months of consumption.

“Sugar inventory levels at the end of fiscal 2026 are expected to remain at levels similar to last year, limiting the rise in working capital debt despite higher distillery operations,” said Poonam Upadhyay, Director, Crisil Ratings.

For the upcoming season, key watchpoints for the sector include temporal and spatial distribution of monsoon, its impact on cane yield, timely ethanol price revisions and clarity on export policy amid global sugar price movements, according to the report.

—IANS

- IANS

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Reader Comments

R
Rahul K.
This is excellent news for our farmers and sugar industry! Maharashtra and Karnataka farmers will especially benefit. Hope the government ensures fair prices for both sugarcane growers and consumers. Ethanol blending is the way forward for energy security 🇮🇳
P
Priya M.
Good production but sugar prices still seem high at ₹35-38/kg. When will common people get relief? Government should intervene to bring prices below ₹30 for household consumers. #SugarPrices
S
Sanjay T.
Ethanol blending program is a game changer! Reducing oil imports while utilizing our sugar surplus. Kudos to policymakers for this vision. Hope they maintain the 20% blending target consistently.
A
Ananya R.
As someone from UP, I've seen how sugarcane farming affects entire villages. Higher production is good but FRP prices must keep pace with input costs. Mills should clear farmers' dues on time! 🚜
V
Vikram J.
While exports are good, we must ensure domestic demand is fully met first. Remember the sugar shortages a few years back? Food security should be priority #1. 1 million tonnes export seems reasonable balance.
N
Neha P.
Hope the monsoon predictions hold true! Our agriculture sector is still so dependent on rains. The report mentions spatial distribution - this is crucial. One bad month can ruin everything despite 'above average' forecast.
K
Karan S.
Sugar industry needs more modernization. We're world's 2nd largest producer but our mills aren't as efficient as Brazil's. With climate change, we can't always rely on good

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