Govt Rejects Ethanol Link to Sugar Price Rise, Says Duty-Free Imports Allowed to Contain Prices

PTI, August 21, 2026, New Delhi: The government on Friday rejected claims that diversion of sugar for ethanol production was driving a sharp rise in sugar prices, saying instead that lower domestic output, festive-season demand and hoarding had prompted the government to impose stock limits and allow duty-free imports to contain prices.

"It is incorrect to attribute the recent increase in sugar prices to diversion of sugar for ethanol production," the Ministry of Consumer Affairs, Food & Public Distribution said in a statement.

The share of sugar diverted for making ethanol for doping in petrol, has, in fact, declined to around 9 per cent in the 2025-26 season from about 12 per cent in 2022-23, while nearly three-fourths of India's ethanol production now comes from grains, particularly maize, it said.

The clarification came as retail sugar prices rose to Rs 55.70 a kg on August 20 from Rs 48.18 a kg on July 20.

The government attributed the increase to lower-than-expected sugar production, stronger demand ahead of the festive season, weather-related crop damage, tightening global supplies and speculation and hoarding by some sections of the industry.