India's Sugar Output To Rise 15% In SY2026 On Back Of Strong Monsoon: ICRA

New Delhi, Jul 17 (KNN) India's sugar production is projected to increase by 15 percent in the upcoming season, driven by above-normal monsoon conditions that are expected to boost sugarcane acreage and yields in key producing states, according to a new report by rating agency ICRA.

The research indicates that Maharashtra and Karnataka, two major sugar-producing states, will experience improved sugarcane yields this year following favourable monsoon patterns.

ICRA projects gross sugar production to reach 34.0 million metric tons in sugar year (SY) 2026, representing a significant increase from 29.6 million metric tons in sugar year 2025.

"ICRA projects the gross sugar production to increase to 34.0 million MT in SY2026 from 29.6 million MT in SY2025 amidst an above-normal monsoons and expected improvement in cane acreage and yield in key sugar-producing states," stated Girishkumar Kadam, Senior Vice President and Group Head of Corporate Ratings, ICRA.

The improved production outlook is expected to translate into revenue growth for sugar companies, with ICRA forecasting a 6-8 percent expansion in sector revenues.

Current domestic sugar prices, ranging between Rs. 39-41 per kilogram, are anticipated to remain stable until the start of the next season, providing support for mill profitability.

However, the report notes that profit margin improvements for sugar mills may remain limited if ethanol prices continue to stagnate.

Despite increased diversion of sugar toward ethanol production in sugar year 2026, closing sugar stock levels are expected to remain at comfortable levels.

The sugar sector's stability is supported by government policy initiatives, including the ethanol blending program.

India has successfully achieved its 20 percent ethanol blending target in recent months, with the government exploring options to increase this target beyond 20 percent to further support distilleries.

ICRA emphasises the critical need for ethanol price revisions to sustain distillery profitability. Juice and B-heavy based ethanol prices have remained unchanged for two consecutive years, despite an approximately 11.5 percent increase in the fair and remunerative price for sugarcane.

"The ethanol blending trend has remained encouraging with 20 percent blending target set by the Government of India achieved in the recent months," Kadam noted.

"However, juice and B-heavy based ethanol prices have not been revised for two consecutive years despite an increase of ~11.5 percent in fair and remunerative price,” he added.

Kadam emphasised, “Hence, revision in ethanol prices remains critical to support the profitability of the distilleries and the sugar industry."

The report projects overall sector stability, supported by anticipated revenue improvements, stable profitability metrics, and comfortable debt coverage ratios, alongside continued government policy support through the ethanol blending program.

(KNN Bureau)