The USDA FAS projects a 14% decrease in India’s sugar output for 2026-27, reaching 29.5 million metric tonnes. This decline stems from inconsistent rainfall, extended dry periods, waterlogging, and pest outbreaks, which have lowered sugarcane yields and the efficiency of sugar extraction.
The projection, released on October 5, 2026, in the USDA’s Sugar Semi-annual report, falls short of the prior estimate of 33.6 MMT. Expected production includes 27.6 million metric tonnes of white sugar and 62,000 tonnes of khandsari.
Anticipated sugar consumption stands at 30.83 million metric tonnes when measured on a raw-value basis, surpassing the expected output by about 1.33 million metric tonnes. This scenario marks the most significant supply deficit in three years.
Surveys conducted from March to September 2026 revealed adverse weather impacts in key producing regions like Maharashtra, Karnataka, and Uttar Pradesh. Inconsistent rainfall and prolonged dry spells influenced sugarcane growth, harvested stalk weight, and sugar content.
Sugarcane cultivation in India is anticipated to drop to 434 million metric tonnes, down from the previous 455 MMT estimate, with the planted area forecast at 5.9 million hectares. The USDA cautioned that intensifying El Niño may aggravate water scarcity and interfere with milling activities in early 2027.
The reduced production forecast coincides with rising domestic costs. Prices climbed from US$515 per tonne on July 20 to US$596 by August 20, while the national retail average hit US$685 per tonne.
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To mitigate supply shortages, the Indian government sanctioned duty-free raw sugar imports of 1 million metric tonnes under a tariff-rate quota for 2025-26, valid until October 31, 2026. Additionally, bulk buyers acquiring over 10 tonnes monthly are required to cap inventories at 15 days of consumption from September 1 to November 30.
The USDA predicts India’s 2026-27 ending stocks at 4 million metric tonnes, a decrease from the prior 6.5 MMT estimate. Raw sugar imports are likely to be primarily channeled through the Advance Authorisation Scheme, mandating processing and re-exportation of the imported product.
Total imports are anticipated at 2.43 million metric tonnes, consisting of 2.4 million tonnes of raw sugar and 30,000 tonnes of refined sugar. Exports are projected at 3.1 million metric tonnes, covering quota allocations for shipments to the United States and the European Union.
Ethanol output remains a competing demand for sugarcane resources. India allocated approximately 3 million metric tonnes of sugar to ethanol in 2025-26 following the attainment of its 20% ethanol blending goal. The government increased the sugarcane Fair and Remunerative Price to Rs3,650 per tonne effective October 1, 2026.
The USDA noted that mills had outstanding payments of Rs 1,12,740 crore (around US$1.4 billion) for 2025-26 cane to farmers. As of August 20, 97% of this amount was settled, with roughly US$360 million still unpaid.