India’s Sugar Output to Fall Below Demand for Second Year — Here’s Why

India's sugar production is set to fall below consumption for a second straight year, as lower cane yields force mills to close faster than usual, ​trade officials told Reuters on April 2.

Lower output, coupled with rising exports, is ‌expected to diminish domestic stockpiles and support local prices, which had been under pressure due to surplus supplies.

"Sugar production is unlikely to exceed 28 million metric tonnes this season," the India head of ​a global trade house based in Mumbai.

"Most sugar mills have already closed, with ​only a few still operational, which are expected to close in the ⁠coming weeks."

Output Falls Below Demand

At the start of the season, industry bodies including the Indian Sugar & Bio-Energy Manufacturers ​Association (ISMA) and the National Federation of Cooperative Sugar Factories Ltd (NFCSF) had forecast production of around ​31mn tonnes, against local demand of 28.5 to 29mn tonnes.

However, lower cane yields due to excessive rainfall had forced 467 of the 541 mills that began operations this year to shut by the end ​of March, according to NFCSF data. Last year, 420 mills had closed by the same ​time.

Indian sugar mills produced 27.12mn tonnes of sugar in the first half of the 2025/26 marketing ‌year ⁠ending in September 2026, up 9% from a year earlier, NFCSF data showed.

Almost all mills in Maharashtra and Karnataka, India's largest and third-largest sugar-producing states, have shut earlier than expected, said a New Delhi-based dealer with a global trade house.

"The government allowed exports hoping for ​a large surplus. But ​now it is certain ⁠that production will not even meet domestic consumption," said the dealer.

In February, India raised its sugar export quota to 2mn tonnes, adding ​500,000 tonnes to the 1.5mn tonnes approved earlier.

After last year's ​drop in ⁠production, the industry was counting on this season to increase stocks and export surplus, but lower output will reduce opening stocks for the next season, said an official with a leading ⁠industry body, ​who declined to be named.

"This season began with opening ​stocks of 5 million tonnes, but the next season will start with less than 4 million tonnes. This should ​help firm up sugar prices," the official told Reuters.

Exports Amid Falling Output

India allowed sugar exports earlier on expectations of surplus, with quotas raised to 2mn tonnes, according to Reuters. However, falling production in 2026 is now tightening supplies, reducing carryover stocks and potentially supporting domestic prices as the market shifts from surplus to deficit conditions.

In contrast, November 2025 saw the opposite trend, with India allowing sugar exports of 1.5mn tonnes due to surplus production driven by lower ethanol diversion, according to Reuters. Output was then estimated at over 30mn tonnes, exceeding domestic demand and prompting efforts to reduce excess stocks.