NEW DELHI: Sugar production during the current season (Oct-Sept) is estimated around 306 lakh tonnes, 11% lower than the initial projection of 343 lakh tonnes for the year by sugarcane-growing states, govt said Friday.

It also dismissed allegations of diversion of sugar for ethanol production hitting availability of the sweetener and spike in prices, stating that smaller amount of sugar goes for ethanol production than was the case a few years ago.The lower output is expected to reduce the opening stock of sugar on Oct 1 to around 33-34 lakh tonnes, down from 50 lakh tonnes a year earlier - around two-thirds of last year's level. Officials, however, said the carry-over stock would be sufficient to meet demand until fresh sugar from the new crushing season starts reaching the market.

The comments came a day after govt allowed duty-free import of 10 lakh tonnes of raw sugar to address supply concerns.

Retail sugar prices rose sharply to Rs 58.2 per kg Friday, 20% higher than a month ago and nearly 26% higher than a year ago.

The food ministry said the increase in sugar prices was due to a combination of factors, including lower-than-expected domestic production, increased demand ahead of the festive season, weather-related damage to the crop, tightening global supplies and speculation and hoarding by some sections.

Ruling out the diversion of sugar for ethanol production impacting prices, it said the share of diverted sugar has declined from around 12% in 2022-23 to around 9% in 2025-26. "Moreover, nearly three-fourths of the ethanol produced in India now comes from grains." TOI has learnt that initially, states had estimated sugar production at 343 lakh tonne for the current season (Oct-Sept 2025-26), while industry body ISMA had estimated it to be around 348 lakh tonnes.

Officials said excess rain in Maharashtra last Oct, and Red Rot and Top Borer disease in sugarcane crop in UP and Maharashtra had impacted production. They added there were initial indications of a fall in production in Jan, but mills were still crushing. " Export started only in March and as soon as there were indications production would be less, export was banned early May," said a source. Govt also said that the tightening of sugar supplies is a global phenomenon while citing that global sugar deficit for 2026-27 is estimated at around 33 lakh tonne. "Concerns over weather conditions have further affected the global outlook," food ministry said.