India resumes sugar imports after nearly a decade

India is returning to sugar imports after an almost decade-long break amid an expected decline in domestic production and a tight supply-demand balance. The government has authorized imports of 1 mln tons of sugar during August–December 2026 to maintain domestic market stability. According to Crisil Ratings, sugar production in the 2027 sugar season could fall to approximately 29 mln tons from 31.1 mln tons a year earlier, a decline of nearly 7%. The decrease is expected to result mainly from lower sugarcane yields due to unfavorable weather conditions in key producing regions.

Domestic sugar consumption in India is expected to remain broadly in line with production, limiting the potential for additional stockbuilding and exports. Meanwhile, export shipments are already constrained by the limited export permissions granted last season. Domestic sugar prices are expected to remain firm, although imports and government measures to ensure sufficient supplies may limit further price increases.

At the same time, India’s sugar industry is facing changes in government policy on bioethanol production. In 2027, the use of sugarcane-based feedstocks for ethanol production is effectively restricted to C-heavy molasses. This represents a significant shift from previous years, when around 10% of gross sugar production was regularly diverted to biofuel production. Reduced output of higher-margin ethanol is forcing mills to rely more heavily on sugar and other alcohol sales.

Rising sugarcane prices are putting additional pressure on processing companies. For the 2027 sugar season, the fair and remunerative price (FRP) of sugarcane has been increased by approximately 3% to 365 rupees per quintal. Any further increase in the state advisory price in Uttar Pradesh could push procurement costs even higher. According to Crisil Ratings, despite an expected 4–5% increase in sugar mills’ revenue, their operating margins could decline by 1.4–1.6 percentage points to approximately 6%.

Analysts also expect sugar mills’ working capital requirements to increase due to higher inventory values and rising procurement costs. This could add to debt burdens, particularly for mills facing substantial loan repayments in the near term. The industry’s outlook for fiscal 2027/28 will depend on the relationship between sugar and sugarcane prices, government bioethanol policy and weather conditions during the monsoon season. Meanwhile, lower production and India’s return to imports could affect the balance of the international sugar market.

Tags: sugar, India, imports