India’s Sugar Output Set To Rise 15% In 2026; Boosting Ethanol Blending & Exports

India will witness a sharp 15% rise in sugar production in the sugar season 2026, with output expected to reach 35 million tonnes.

Crisil’s latest report attributes this surge to an above-average monsoon and improved cane acreage and yields in key states like Maharashtra and Karnataka.

The increased output will ease the domestic sugar supply constraints experienced in recent years.

It may also create room for enhanced ethanol diversion and a possible resumption of sugar exports, subject to favourable government policy.

The outlook presents a positive shift for the sector, which has been grappling with supply-side constraints.

Margins & credit outlook for sugar mills

Crisil projects that improved sugar availability and higher ethanol diversion will help sugar mills recover operating margins to 9–9.5% in fiscal 2026.

This recovery is set to strengthen sugar companies’ credit profiles, which came under strain last year from rising input costs and restricted revenue flexibility.

Over the past two sugar seasons, the fair and remunerative price (FRP) of sugarcane has risen by 11%, while ethanol prices have remained largely flat.

Sugar mills will drive growth in ethanol blending volumes, supported by increased output and favourable policy incentives.

Sugar mills will divert 4 million tonnes of sugar for ethanol production in 2026, supporting India’s 20% blending target, already 19% achieved.

This compares to 3.5 million tonnes in the previous season. Ethanol offers faster liquidity to mills, further incentivising the shift from sugar to fuel.

Price stability & export outlook

Domestic sugar prices have remained steady in the range of ₹35–38 per kg this season.

With output set to rise significantly, prices are expected to remain stable and range-bound in the near term.

India exported 1 million tonnes of sugar in the 2025 season.

With robust production and a healthy opening inventory covering two months of consumption, exporters expect to maintain 2026 sugar exports at similar levels, pending regulatory approvals.

The combination of high output, steady prices, and strong ethanol diversion policies puts the Indian sugar sector on firm footing for the coming year.

Supported by improved margins and demand resilience, the sector is likely to play a strong role in both domestic energy security and trade performance.

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