Total sugar production expected to reach 350 lakh tonnes from next season

27-Jun-2025 06:20 PM

Mumbai. A leading rating agency has estimated that sugar production in India will rise by 15 percent to around 350 lakh tonnes in the 2025-26 marketing season (October-September), compared to the 2024-25 season.

The forecast is based on expectations of an increase in sugarcane sowing in key producing states such as Maharashtra and Karnataka, as well as the likelihood of above-average monsoon rainfall, which may improve sugarcane yields.

According to the agency, the average recovery rate of sugar from sugarcane had declined in the 2024-25 season but is likely to improve in 2025-26.

With increased production, the current challenges related to sugar supply and availability in the domestic market may ease.

The higher output will also create more scope for sugar diversion into ethanol production, and if favorable export policies are adopted, the government may permit more sugar exports. This would provide some relief to sugar mills, which are currently under pressure on multiple fronts.

The government has raised the fair and remunerative price (FRP) of sugarcane for the 2025-26 season. However, the purchase price of ethanol has not been revised, and sugar exports are facing difficulties.

The operating margin of sugar mills is expected to improve to 9.00–9.50 percent during the 2025-26 financial year, compared to 8.70–9.00 percent in 2024-25. A larger share of sugarcane is anticipated to be used for ethanol production.

Despite this diversion, if sugarcane equivalent to 40 lakh tonnes of sugar is used for ethanol production, around 310 lakh tonnes of sugar will still be available for food consumption.

The improvement in operating margins is likely to help sugar mills secure financing more easily, addressing the liquidity challenges that emerged in the last financial year.

Over the past two seasons, the FRP for sugarcane has increased by 11 percent, while ethanol purchase prices have remained unchanged.