How did sugar prices rise from ₹45 to ₹65 per kg in just one month? Is the ethanol being blended into petrol responsible, or is the real story something else?
New Delhi: India blends ethanol with petrol to reduce its dependence on crude oil imported from other countries. But that raises an important question where does this ethanol come from?
Ethanol can be produced from sugarcane as well as grains, especially maize. And this is where the story of sugar and petrol becomes connected.
Think of it this way: when sugarcane reaches a sugar mill, it can be used to produce sugar. But part of the same raw material can also be diverted towards ethanol production. So, naturally, if more sugarcane goes towards ethanol, less may be available for making sugar.
But this time, the story is not that simple.
A large share of the ethanol now being used for blending in India is produced from grains. So, it would be wrong to say that sugar has become expensive only because of ethanol.
The real story begins in the fields.
For 2025-26, sugar production was initially expected to be higher. But weather and crop-related problems changed those estimates, and production is now expected to be around 3.7 million tonnes lower.
Excessive rainfall and waterlogging damaged sugarcane crops in Maharashtra, Karnataka and Gujarat. In Uttar Pradesh, diseases such as red rot and pests like top borer also affected the crop.
Now, think of it like a shop.
If less stock is arriving at the shop, the warehouse inventory is already going down, and suddenly more customers arrive during the festival season, what happens?
Prices go up.
The same thing happened with sugar.
Production fell, existing stocks started declining, and rising demand put even more pressure on supply. As a result, the country’s sugar stocks are estimated to have reached their lowest level in around nine years.
Ethanol has played a role, as some sugar was diverted towards ethanol production in 2025-26. But according to the latest data, the biggest reason behind expensive sugar this time is not ethanol it is lower production and declining stocks.
To ease the pressure on supply, the government has also allowed the duty-free import of 1 million tonnes of raw sugar.
So, the simple answer is this:
Ethanol is not the only reason your tea is becoming less sweet.
This story started with a poor crop. Production fell, stocks declined, and rising demand pushed sugar prices higher.
