India rejects ethanol link to sugar prices, approves imports

The Indian government has rejected claims that diverting sugar for ethanol production is driving a recent surge in domestic sugar prices, instead attributing the increase to lower output, festive demand, and speculative hoarding. Officials announced a series of measures on Friday to stabilize the market, including nationwide stock limits for dealers and a new quota for duty-free sugar imports.

Food and Public Distribution Secretary Sanjeev Chopra stated that ex-mill sugar prices have risen sharply over the past week without any supply-side justification. The all-India average retail price has climbed to approximately 56 rupees per kilogram, up from around 48 rupees per kilogram on July 20. Chopra said the government has conveyed its concerns to industry bodies, calling the sudden price hike "unjustified" and "not acceptable."

The government's clarification comes as some stakeholders have argued that diverting sugar to make ethanol for blended fuel has tightened domestic supplies. Officials firmly disputed this, noting that the share of sugar diverted for ethanol has fallen to about 9 percent in the 2025-26 season, down from 12 percent in 2022-23. Furthermore, only about...