India May Import Sugar for Second Consecutive Year Amid Low Output, High Prices

India, the world's second-largest sugar producer, is expected to import sugar for the second year in a row during the 2025-26 season. This comes as lower domestic output, driven by drought in key states, has pushed local sugar prices to record highs. State water allocation priorities further reduce expected sugar content in the upcoming cane harvest.

India, the world's second-largest sugar producer, is expected to import sugar for the second year in a row during the 2025-26 season. This comes as lower domestic output, driven by drought in key states, has pushed local sugar prices to record highs. State water allocation priorities further reduce expected sugar content in the upcoming cane harvest.

India is anticipated to import sugar for the second consecutive year during the 2025-26 season, a significant shift for a nation that has historically been a major producer and exporter. This decision stems from a combination of lower domestic sugar output and the resulting surge in local prices, which have reached record highs.

For nearly a decade, India held a 'structurally surplus' position, meaning its domestic sugar production consistently exceeded demand. As the world's second-largest sugar producer, this surplus typically allowed India to be a net exporter. However, this trend reversed during the 2025-26 season when the country was compelled to import sugar due to a substantial drop in production that led to unprecedented price increases for consumers.

The primary drivers behind the current forecast for a second year of imports are severe climatic conditions and policy decisions affecting agricultural resources. Executives in the sugar industry point to prolonged rainfall shortages in two key sugar-producing states: Maharashtra and Karnataka. These states are critical to India's overall sugar output, and their reduced rainfall directly impacts cane growth and yield.

Adding to the challenge, state governments in these regions have prioritised reservoir water for drinking purposes over agricultural irrigation. While essential for public health, this policy has further constrained water availability for sugar cane fields. Industry executives expect this lack of adequate irrigation, combined with the dry conditions, to reduce the sugar content within the cane due for crushing from October onwards. A lower sugar content per cane stalk means that even if the volume of cane harvested is reasonable, the actual sugar produced will be less, exacerbating the supply deficit.

The prospect of continued sugar imports highlights ongoing concerns about India's food security and the impact of climate change on agricultural commodities. For the Indian retail consumer, this situation could translate into sustained pressure on sugar prices, affecting household budgets for a staple commodity.

This report is for informational purposes only and does not constitute financial or investment advice.