India's sugar output to rise 15% at 35 mn tonnes
New Delhi: 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 Rs35-38 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.
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