Indian sugar prices may rise on lower Nov quota, export permit buzz & hike in UP cane price
The committee of ministers under Union Home Minister Amit Shah is likely to decide next week whether to permit sugar export
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The Uttar Pradesh government on Wednesday announced ₹30 per quintal increase in the State advised price (SAP) for sugarcane purchase to be paid by sugar mills amid a buzz in the market that the government may permit 1 million tonnes (mt) sugar for export.
These two factors along with 9 per cent lower November quota — 2 mt against 2.2 mt a year ago — allotted for domestic sales may help sugar prices to inch up in the coming days. But, the industry refuses to speculate on the price outlook while stating that it would review the production estimates for 2025-26 after a week.
Ethanol issue
Addressing the media, Niraj Shirgaokar, Vice-President of Indian Sugar and Bio-Energy Manufacturers Association (ISMA), said that there is an urgent need to allow 2 mt of sugar for exports as due to a lower ethanol quota for sugar-based distilleries, mills would be forced to produce sugar, rather than diverting the cane juice directly for the biofuel production.
An industry leader said that his company has received orders from oil marketing companies (OMCs) at 33 per cent of its sugar-based ethanol capacity and 22 per cent of grain-based ethanol capacity which have rendered the distilleries unviable.
The committee of ministers under Union Home Minister Amit Shah is likely to decide next week whether to permit sugar export. Mills shipped about 0.8 mt of sugar in the 2024-25 season that ended on September 30 against an allocation of 1 mt by the government. Sugar export is permitted through allocation of mill wise quota when there is a surplus.
Shirgaokar said there is an immediate need to increase the minimum selling price (MSP) for sugar to ₹40/kg, which has been unchanged at ₹31 per kg since February 2019, though the government-set fair and remunerative price (FRP) of sugarcane has surged 29 per cent to ₹355 per quintal.
Current prices
The cost of sugar production has increased to ₹40.24 per kg, based on FRP and it will even be higher when the SAP is factored into. Uttar Pradesh, India’s top sugarcane-growing state, has raised its SAP to ₹400/quintal for the 2025-26 season. As per the Order of the Supreme Court, sugar mills are mandated to buy sugarcane at SAP wherever the State fixes it.
Currently, the ex-mill sugar price in Uttar Pradesh hovers around ₹39-41/kg, whereas it is ₹37-38/kg in Maharashtra, industry sources said.
ISMA demanded a higher share of ethanol contracts for the 2025-26 ethanol supply year (ESY) that starts from November 1 as the OMCs have allocated 289 crore litres of ethanol (28 per cent of the total requirement of 1,050 crore litres) to sugar-based units and 760 crore litres (72 per cent) to grain-based distilleries.
Financial stress warning
ISMA has cautioned that that if the inadequate allocation is not reviewed, it could trigger financial stress on mills and delay payments to cane farmers. The allocation falls short of expectation, despite the sugar sector investing more than Rs 40,000 crore to build ethanol capacity exceeding 900 crore litres, ISMA said.
“There has been some kind of a policy gap and planning gap as far as the OMCs are concerned, which has led to the abnormality and disruption in allotment of ethanol for the sugar industry,” ISMA Director General Deepak Ballani said. He said 75 per cent allocation should be reserved for sugar-based feedstocks in cycle 2 as ISMA expects OMCs could float tender for supply of another 200 crore litres.
Published on October 29, 2025
