India’s gross sugar production is projected to rise by 15% to 35 million tonnes in the 2025–26 sugar season (SS26), driven by an above-average monsoon that is expected to boost cane acreage and yields in key producing states like Maharashtra and Karnataka, according to a report by Crisil Ratings.
🌧️ Monsoon Revival Spurs Cane Growth
- The Indian Meteorological Department’s forecast of a strong monsoon has encouraged farmers to expand sugarcane cultivation
- Improved rainfall distribution is expected to enhance productivity, especially in drought-prone belts of western and southern India
- The anticipated output increase comes after a five-year low of 29.5 MT in the 2024–25 season
🛢️ Ethanol Diversion and Export Outlook
- Sugar diversion for ethanol blending is expected to rise to 4 million tonnes, up from 3.5 MT in SS25
- This aligns with the government’s 20% ethanol blending target, which has reached a 19% average so far
- With higher output and a two-month opening inventory, India could sustain exports at 1 million tonnes, provided policy support continues
📉 Profitability and Pricing Trends
- Despite the production boost, sugar prices are likely to remain range-bound at ₹35–38/kg
- The Fair and Remunerative Price (FRP) for cane has been hiked by 4.5% to ₹355/quintal, while ethanol procurement prices remain stagnant
- As a result, operating margins for integrated sugar mills are expected to improve only marginally to 9–9.5%, up from 8.7–9% in FY25
“The strategic diversification to ethanol was intended to de-risk earnings, but rising cane costs and flat ethanol prices have capped profitability,” said Anuj Sethi, Senior Director at Crisil Ratings
📌 Why It Matters
- Eases domestic supply constraints and supports energy diversification goals
- Reinforces India’s position as a key player in the global sugar and ethanol markets
- Offers a credit boost to sugar mills, especially those with integrated distillery operations
🔁 Share this article to highlight India’s sweet surge in sugar production and its ripple effects on energy, exports, and rural livelihoods.
